WASHINGTON — Oil prices climbed on Monday, driven by optimism over a potential interest rate cut by the US Federal Reserve (Fed) and ongoing disruptions in cease-fire negotiations in the Middle East.

International benchmark Brent crude rose 0.73% to $78.72 per barrel at 09:33 a.m. local time (0633 GMT), up from the previous session's close of $78.15. Meanwhile, US benchmark West Texas Intermediate (WTI) increased by 0.82% to $75.44 per barrel, following a close of $74.83 in the prior session.

On Friday, US Federal Reserve Chair Jerome Powell signaled a possible interest rate cut at the central bank's upcoming meeting in September. Commodity prices surged after Powell's much-anticipated speech at the annual Jackson Hole symposium in Wyoming.

A reduction in interest rates in the US, the world's largest oil-consuming country, is expected to stimulate economic activity and increase oil demand.

Fed Chair Powell expressed growing confidence that inflation is on a sustainable path back to 2%, stating that "the time has come" for an adjustment in monetary policy.

"The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks," Powell said at the symposium. He added that the overall economy continues to grow at a solid pace.

Analysts are certain that the Fed will cut interest rates by 25 basis points next month, while the possibility of a 50 basis point cut is also under consideration.

Market pricing indicates that the Fed may cut interest rates by a total of 100 basis points by the end of the year. The likelihood of a 50 basis point cut in September is estimated at 32.5%, while the probability of a 25 basis point cut stands at 67.5%.

Further contributing to the rise in oil prices are concerns over supply disruptions in the Middle East.

Despite ongoing international cease-fire negotiations, Israel has intensified its attacks on the blockaded Gaza Strip. Since October 7, 2023, the Israeli offensive has resulted in over 40,400 Palestinian deaths, mostly women and children, and more than 93,000 injuries, according to local health authorities.

The latest round of cease-fire talks concluded in Cairo on Sunday without reaching an agreement. The Palestinian group Hamas has demanded that Israel adhere to the terms agreed upon on July 2, in line with a proposal laid out by US President Joe Biden on May 31 and a UN Security Council resolution. — Agencies