Oil prices rose slightly due to Middle East instability and China’s stimulus plans, despite global growth concerns. Brent crude increased to $71.24, while U.S. crude reached $67.72. Analysts noted positive retail sales data in China but cautioned about potential impacts from U.S. tariffs and geopolitical tensions.
Oil prices experienced a modest increase on Tuesday, attributed to geopolitical instability in the Middle East, alongside China’s new stimulus initiatives. Despite these factors, concerns about global economic growth and ongoing discussions regarding U.S. tariffs and a potential ceasefire in Ukraine curtailed stronger price gains. Brent crude futures rose 17 cents to $71.24 per barrel, while U.S. West Texas Intermediate crude increased by 14 cents to $67.72 per barrel.
Analysts from ING noted the contributions of several elements to the market’s support, including U.S. military action against the Houthis in Yemen. Additionally, China announced plans aimed at boosting domestic consumption and reported better-than-expected retail sales and fixed asset investment growth. The Chinese state council revealed a special action plan on Sunday that includes measures for increasing incomes and providing childcare subsidies.
Positive economic data from China indicated a significant rise in retail sales growth during January and February, despite a decline in factory output and an increase in the urban unemployment rate to its highest level in two years. Additionally, crude oil throughput in China showed a 2.1% rise in early 2023, aided by a new refinery and increased travel during holidays.
Support for oil prices also stemmed from President Donald Trump’s declaration to maintain military pressure on Yemen’s Houthis unless they cease their attacks on maritime vessels in the Red Sea. In Gaza, ongoing air strikes reportedly resulted in numerous casualties amidst a breakdown of temporary ceasefire negotiations, further complicating regional tensions.
Despite these factors, the OECD expressed ongoing concerns about demand, suggesting that tariffs imposed by the U.S. could hinder economic growth in North America, thus affecting global energy demand negatively. Westpac’s head of commodity and carbon strategy, Robert Rennie, asserted that with the global supply increasing and tariffs impacting demand, oil prices are projected to eventually fall towards the mid-$60s range.
Moreover, Venezuela’s state-run oil company, PDVSA, is reportedly planning to continue its oil production and export activities in collaboration with Chevron despite an impending expiration of a U.S. license. Discussions surrounding an end to the Ukraine conflict between President Trump and Russian President Putin are also significant, as potential peace negotiations might involve lifting sanctions on Russia, thereby affecting global oil supply and price dynamics.
In summary, oil prices are influenced by a combination of geopolitical risks in the Middle East, China’s economic stimulus efforts, and emerging data from the region. While there are positive indicators from China’s economy, concerns about global demand, particularly due to U.S. tariffs and ongoing tensions in conflict zones, have tempered these gains. Industry experts suggest that the outlook remains cautious, with potential downward pressure on prices expected in the future.
Original Source: ina.iq
