Oil prices rose slightly due to instability in the Middle East and China’s economic stimulus plans, despite concerns about global growth and geopolitical tensions. Brent futures increased to $71.24 and U.S. West Texas Intermediate rose to $67.72 per barrel. Factors such as stronger retail sales in China and U.S. military actions in Yemen supported prices, but global supply and demand concerns may drive costs lower soon.
On Tuesday, oil prices experienced a slight increase due to ongoing instability in the Middle East, coupled with China’s stimulus initiatives. Despite this support, concerns about global economic growth, U.S. tariffs, and negotiations regarding a ceasefire between Russia and Ukraine somewhat limited further gains. Brent futures rose by 17 cents, reaching $71.24 per barrel, while U.S. West Texas Intermediate crude futures increased by 14 cents to $67.72 per barrel.
Analysts at ING noted several factors of support in the market, stating, “Along with U.S. strikes on the Houthis in Yemen, several factors provided support to the market.” They pointed to China’s announcement of plans to invigorate consumption alongside stronger-than-expected growth in Chinese retail sales and fixed asset investments.
The Chinese cabinet recently introduced a specific action plan aimed at enhancing domestic consumption through measures such as increasing incomes and providing childcare subsidies. Moreover, data from January and February showed a notable increase in retail sales, although factory output decreased and the urban unemployment rate reached its highest level in two years.
Crude oil throughput in China, the leading global crude importer, increased by 2.1% year-on-year in the first two months of the year, aided by a new refinery and holiday-related travel. Additional support for prices was derived from President Donald Trump’s commitment to intensifying military action against Yemen’s Houthis unless they cease assaults on ships in the Red Sea.
The ongoing Israel-Palestinian conflict also escalated, with Israeli airstrikes reportedly resulting in at least 200 fatalities in Gaza, according to Palestinian health authorities. This intensified situation arose after a recent ceasefire that had been in effect since January.
Highlighting the persistent concerns regarding demand as a significant risk to oil prices, the OECD indicated that President Trump’s tariffs would negatively impact growth in North America, resulting in reduced global energy demand. Robert Rennie, head of commodity and carbon strategy at Westpac, expressed that, “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.”
Moreover, Venezuela’s state-run PDVSA is preparing to continue oil production and exports from its joint venture with Chevron post-expiration of a U.S. license next month, according to internal documents. Discussions between President Trump and Russian President Vladimir Putin about a potential resolution to the Ukraine conflict have also attracted attention, as any positive outcomes could lead to eased sanctions and a return of Russian crude to the global market, thereby placing additional downward pressure on prices.
In summary, oil prices have risen slightly due to Middle Eastern instability and China’s economic stimulus plans, despite global growth concerns and ongoing geopolitical tensions. Factors such as China’s retail sales growth and President Trump’s military stance against Yemen’s Houthis contributed to this slight increase. However, concerns over demand driven by tariffs and global supply may lead to further declines in oil prices in the near future.
Original Source: ina.iq
