Oil prices rose slightly amid Middle East instability and China’s economic measures, although fears over global growth and U.S. tariffs limited gains. Brent crude rose to $71.24, while WTI reached $67.72. Analysts noted support from U.S. military actions and China’s plans to boost consumption despite rising global supply and demand concerns.
Oil prices saw a slight increase on Tuesday, buoyed by geopolitical instability in the Middle East and China’s stimulus initiatives, despite existing concerns regarding global growth, U.S. tariffs, and ongoing ceasefire discussions between Russia and Ukraine. Brent crude futures rose by 17 cents, or 0.2%, reaching $71.24 per barrel, while U.S. West Texas Intermediate crude saw a similar increase of 14 cents, or 0.2%, to stand at $67.72 per barrel.
ING analysts noted that several factors contributed to market support, including U.S. military actions against the Houthis in Yemen. Furthermore, China’s announcement of plans aimed at reviving domestic consumption, alongside stronger-than-expected growth figures for retail sales and fixed asset investment, bolstered investor sentiment. The state council of China revealed initiatives to enhance consumer spending, which included income boosts and childcare subsidies.
Chinese economic data indicated that retail sales growth accelerated during January and February, although there were declines in factory output and the urban unemployment rate peaked at its highest in two years. Additionally, crude oil throughput in China, the leading crude importer globally, increased by 2.1% year-on-year, benefiting from new refinery operations and holiday travel.
Support for oil prices was also influenced by President Trump’s commitment to maintaining military pressure on Yemen’s Houthis as long as their attacks on vessels in the Red Sea persist. The conflict in Gaza recently escalated with lethal Israeli airstrikes, highlighting enduring geopolitical tensions.
However, the outlook remains clouded by persistent demand concerns. The OECD projects that tariffs imposed by the U.S. could negatively impact growth across the U.S., Canada, and Mexico, subsequently dampening global energy demand. According to Robert Rennie from Westpac, “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.”
Additionally, Venezuela’s state-owned oil company PDVSA aims to continue oil production and exports from its joint venture with Chevron, even with the expiration of Chevron’s U.S. license next month. Also noteworthy is the ongoing dialogue between President Trump and President Putin regarding the resolution of the Ukraine conflict, as markets speculate that possible negotiations might lead to a reduction in sanctions against Russia, potentially increasing crude supply in global markets.
In summary, oil prices experienced a minor uptick due to geopolitical tensions and China’s economic stimuli, although they remain constrained by concerns over global demand and tariffs. Despite these gains, analysts continue to project potential downward pressures on prices influenced by increasing global supply and trade-related challenges. The situation remains dynamic, especially with developments in Venezuela and ongoing peace negotiations between the U.S. and Russia regarding Ukraine.
Original Source: shafaq.com
