09:01 AM EDT, 08/12/2024 (MT Newswires) -- Oil prices rose early Monday on heightened Middle East tensions, even as OPEC lowered a rosy 2024 demand forecast it maintained for more than a year due to weak demand from China.

West Texas Intermediate crude oil for September delivery was last seen up US$0.95 to US$77.79 per barrel, while October Brent crude, the global benchmark, was up US$0.78 to US$80.44.

The rise comes as Iran is soon expected to attempt to a retaliatory strike at Israel after the assassination of of a senior official in the Hamas militant group in Tehran earlier this month and strikes against the leadership of the Hezbollah militants in Beirut. Both groups are backed by Iran, raising it may spark a wider Middle Eastern war that could affect Persian Gulf oil supplies.

"The deterioration in diplomatic language, belligerent military action from Israel in a quarter of its compass zone coupled with stories of stealth missiles in Iran's arsenal and this morning's news of the US sending a missile laden submarine to the area should rightly be viewed with a worried gaze. Israel is also now expecting an attack from Iran this week," PVM Oil Associates said in a note.

OPEC on Monday lowered its forecast for 2024 oil demand for the first time since July, 2023, on weaker oil demand from China. In its Monthly Oil Market Report, the cartel cut its forecast for demand growth over 2023 levels by 135,000 barrels per day.

"It now stands at a healthy 2.1 mb/d, well above the historical average of 1.4 mb/d seen prior to

the COVID-19 pandemic. This slight revision reflects actual data received for 1Q24 and in some cases 2Q24,

as well as softening expectations for China's oil demand growth in 2024," it noted.

Still, OPEC's outlook remains well above the other two major forecasting agencies. The Energy Information Administration last week said in its monthly Short-Term Energy Outlook it expects 2024 demand to rise by 1.1-million bpd. The International Energy Agency will update its forecast on Tuesday when it issues its August Oil Market Report. In July it pegged demand growth at just under one-million bpd for this year and 2025.