Oil prices rose slightly due to Middle East instability and China’s economic stimulus, despite global growth worries and trade concerns. Brent crude increased to $71.24, while U.S. West Texas Intermediate reached $67.72. Analysts point to ongoing U.S. military action in Yemen and mixed Chinese economic indicators influencing the market.
Oil prices experienced a modest increase on Tuesday, primarily driven by geopolitical instability in the Middle East alongside China’s stimulus measures and encouraging economic data. Brent crude futures rose by 17 cents to $71.24 per barrel, while U.S. West Texas Intermediate crude climbed 14 cents to $67.72 per barrel. However, concerns surrounding global growth, U.S. tariffs, and ongoing talks for a ceasefire between Russia and Ukraine limited further gains.
ING analysts highlighted a variety of factors contributing to this market support, noting, “Along with U.S. strikes on the Houthis in Yemen, several factors provided support to the market.” They pointed out China’s action plan aimed at revitalizing domestic consumption, which includes initiatives to enhance incomes and offer childcare subsidies. Stronger-than-expected growth in Chinese retail sales and fixed asset investments also boosted investor confidence.
Despite positive signals, some economic data raised alarms, as January-February figures showed an increase in retail sales; however, factory output decline and the urban jobless rate reached a two-year high. Additionally, China’s crude oil throughput grew by 2.1% year-on-year due to new refinery activity and increased travel.
Support for oil prices is also linked to President Donald Trump’s commitment to maintain the U.S. military presence in Yemen until the Houthis cease their attacks on maritime vessels. The ongoing Israel-Palestinian conflict also remains a concern after recent air strikes in Gaza reportedly resulted in high casualties.
The OECD signaled ongoing risks to demand, stating that existing tariffs could hinder economic growth in North America, impacting overall global energy demand. Westpac’s Robert Rennie commented, “With global supply surging and tariffs and trade wars set to hit global demand, we remain of the view that prices will head lower and eventually reach the mid $60s.”
In terms of supply dynamics, Venezuela’s PDVSA plans to continue oil production and exports despite the impending expiration of Chevron’s license, leveraging various operational scenarios. Furthermore, Tuesday’s discussions between Trump and Putin about the Ukraine conflict suggested possible easing of sanctions against Russia, which could reintroduce its crude supply to the global market, influencing price levels accordingly.
In summary, oil prices are influenced by multiple factors, including geopolitical tensions, economic stimuli from China, and impending tariffs that create uncertainty in demand. While there are signs of a moderate price rise, analysts foresee potential downward trends due to increased global supply and ongoing trade disputes. Continued monitoring of international negotiations and economic data will be essential for further understanding price movements in the oil market.
Original Source: ina.iq
