Oil prices increased on concerns over Middle East tensions and Chinese stimulus plans, despite global growth worries and the impact of U.S. tariffs. Brent futures rose to $71.24, while WTI climbed to $67.72. Analysts caution against potential declines due to increased supply and trade issues.
On Tuesday, oil prices experienced a modest rise, influenced by geopolitical instability in the Middle East and China’s recent stimulus initiatives. However, concerns regarding global economic growth, U.S. tariffs, and ongoing discussions surrounding a ceasefire between Russia and Ukraine tempered these gains. Brent crude futures increased by 17 cents or 0.2%, reaching $71.24 a barrel, while U.S. West Texas Intermediate crude futures rose by 14 cents or 0.2%, settling at $67.72 a barrel.
Analysts from ING highlighted various factors that contributed to market support, emphasizing the significance of U.S. military actions against the Houthis in Yemen and developments in China. China announced a comprehensive action plan aimed at revitalizing domestic consumption, featuring measures to enhance incomes and provide childcare subsidies. Stronger-than-anticipated retail sales and fixed asset investment growth bolstered investor sentiment, despite declining factory output and a two-year high in urban unemployment rates.
Additionally, official statistics indicated a 2.1% increase in crude oil throughput in China, the world’s largest crude importer, during January and February, attributed to the commencement of a new refinery and holiday travel. President Trump’s commitment to intensifying the U.S. offensive against Yemen’s Houthis, unless they halt their maritime attacks, also lent support to oil prices.
In connection with the ongoing Israel-Palestinian conflict, recent Israeli airstrikes in Gaza resulted in over 200 fatalities, according to Palestinian health authorities. These airstrikes marked the conclusion of a prolonged ceasefire negotiation, which had temporarily suspended fighting that had begun in January. However, the OECD cautioned on Monday that U.S. tariffs could hinder growth in North America, posing a considerable downside risk for future oil demand.
Robert Rennie, head of commodity and carbon strategy at Westpac, expressed concerns that global supply increases, combined with trade conflicts, would likely lead to lower oil prices in the future, potentially bringing them to the mid-$60s range. Furthermore, Venezuela’s state-owned PDVSA is exploring three operational scenarios to sustain oil production and exports in partnership with Chevron, following the expiration of the U.S. company’s license next month. Furthermore, ongoing discussions between President Trump and President Vladimir Putin regarding the Ukraine conflict are scrutinized, as potential peace negotiations could lead to reduced sanctions on Russia and the normalization of its crude supply, further impacting oil prices.
In summary, oil prices have slightly increased due to geopolitical tensions in the Middle East and positive economic stimulus measures from China, despite global growth concerns and trade tariffs. Analysts remain cautious about potential downward pressure on oil prices from rising supply levels and trade disputes. The future market landscape may change significantly depending on diplomatic negotiations surrounding the Russia-Ukraine conflict and Venezuela’s oil production plans.
Original Source: ina.iq
