During early trade, oil prices experienced a slight increase, driven by concerns that the ongoing conflict in the Middle East might affect supply in this critical production area, along with expectations that the recent US interest rate cut would bolster demand.

Brent crude futures for November rose by 20 cents, or 0.3%, reaching $74.69 a barrel at 0045 GMT. Similarly, U.S. crude futures for November climbed 22 cents, or 0.3%, to $71.22.

Both contracts had gained in the previous session, supported by the U.S. interest rate cut and a decrease in US supply following Hurricane Francine. Oil prices had also increased for a second consecutive week last week.

The US Federal Reserve had reduced interest rates by half a percentage point the previous Wednesday, marking a larger decrease in borrowing costs than many analysts had anticipated.

Typically, interest rate cuts enhance economic activity and energy demand; however, analysts and market participants expressed concerns that the central bank might perceive a slowing job market. ANZ stated that the sentiment was lifted by the Fed's rate cut, fostering hopes that it could lead to a soft landing for the economy. They noted that a weaker US dollar also encouraged investor interest.

Furthermore, ANZ highlighted that the ongoing fighting between Israel and Iranian-backed militias had heightened fears that the conflict could involve Iran, a significant oil producer in the region.

Hezbollah, an Iranian-backed group based in Lebanon, and Israel exchanged intense fire, with Hezbollah launching rockets deep into northern Israeli territory after enduring some of the most severe bombardments in nearly a year of conflict.

The situation escalated dramatically over the past week after thousands of pagers and walkie-talkies used by Hezbollah members exploded, an attack widely attributed to Israel, which had neither confirmed nor denied its involvement.