Oil Prices Edge Up Amid Middle East Tensions, China’s Economic Stimulus
By Staff, Agencies
Oil prices saw a slight increase on Tuesday, driven by geopolitical instability in the Middle East and China’s newly announced stimulus measures. However, concerns over global economic growth, US tariffs and ongoing Russia-Ukraine ceasefire negotiations limited the gains.
By 3:50 AM GMT, Brent crude futures rose by 17 cents, or 0.2%, reaching $71.24 per barrel, while US West Texas Intermediate [WTI] crude climbed 14 cents, or 0.2%, to $67.72 per barrel.
"Along with US strikes on the Houthis in Yemen, several factors provided support to the market," analysts from ING stated in a research note. "China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth exceeded expectations."
On Sunday, China’s State Council introduced a special action plan aimed at boosting domestic consumption, including income-enhancing policies and childcare subsidies.
Monday’s economic data from China further fueled optimism, as retail sales growth accelerated in January and February. However, factory output slowed, and the urban unemployment rate climbed to its highest level in two years.
Meanwhile, crude oil processing in China—the world’s largest oil importer—rose by 2.1% during the first two months of the year compared to the same period in 2023, supported by new refinery activity and increased holiday travel, according to official figures.
Oil prices also gained support from US President Donald Trump’s pledge to continue military operations against Yemen’s Ansarullah unless they cease operations on Red Sea shipping.
Amid escalating violence in Gaza, “Israeli” airstrikes killed at least 200 people on Tuesday, according to Palestinian health officials, ending a prolonged standoff over extending a ceasefire that had halted hostilities since January.
On the economic front, the OECD warned on Monday that Trump’s tariffs could slow growth in the US, Canada and Mexico, which could dampen global energy demand.
"With global supply increasing and trade tensions weighing on demand, we maintain our view that prices will eventually decline to the mid-$60s," said Robert Rennie, head of commodity and carbon strategy at Westpac.
In another development impacting supply, Venezuela’s state-owned oil company PDVSA has outlined three scenarios for continuing oil production and exports through its joint venture with Chevron after the US company’s license expires next month, according to an internal document reviewed by Reuters.
Markets are also closely watching Tuesday’s talks between Trump and Russian President Vladimir Putin regarding a potential end to the Ukraine war.
Analysts suggest that any peace deal could involve lifting sanctions on Russia, potentially increasing global crude supply and exerting downward pressure on prices.
