Oil prices rose slightly due to Middle Eastern instability and Chinese stimulus plans, but global growth concerns and tariffs limited gains. Brent climbed to $71.24 and U.S. crude to $67.72. Ongoing geopolitical tensions and market forecasts indicate potential pressures on future oil demand.
Oil prices experienced a slight increase on Tuesday, driven by instability in the Middle East and stimulus measures from China, even as concerns over global economic growth, U.S. tariffs, and ongoing ceasefire discussions between Russia and Ukraine limited the extent of the increase. Brent crude futures rose by 17 cents to reach $71.24 per barrel, while U.S. West Texas Intermediate crude increased by 14 cents to attain $67.72 per barrel.
ING analysts indicated that U.S. military actions against the Houthis in Yemen were among several factors supporting oil prices. China announced initiatives to stimulate domestic consumption, including enhancing income levels and introducing childcare subsidies, alongside robust growth figures for retail sales and fixed asset investments.
Despite positive retail sales data for January-February, which showed unexpected growth, challenges remain. China’s factory output declined, and unemployment reached its highest level in two years. Nonetheless, crude oil throughput in China saw a 2.1% year-on-year increase, attributed to new refinery operations and holiday travel.
Support for oil prices also stemmed from President Donald Trump’s commitment to continue military operations against Yemeni Houthis unless they cease attacks on maritime vessels in the Red Sea. Moreover, the ongoing Israel-Palestinian conflict saw deadly air strikes in Gaza, intensifying geopolitical risks.
The OECD spotlighted potential demand risks, noting that the imposition of tariffs by Trump could negatively impact economic growth in the U.S., Canada, and Mexico, thereby affecting global energy demand. Robert Rennie from Westpac expressed concerns: “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.”
Further contributing to global oil supply is Venezuelan state-run PDVSA, which has developed operational strategies to maintain production and exports in collaboration with Chevron, even after the expiration of Chevron’s U.S. license next month. Conversations between President Trump and Russian President Putin regarding a potential resolution to the Ukraine conflict are also being closely monitored, as they could impact sanctions against Russia and return crude supplies to global markets, consequently affecting oil prices.
In summary, oil prices saw a marginal increase influenced by geopolitical instability in the Middle East and China’s economic stimulus efforts. However, the persistent fears regarding global economic growth, challenges posed by tariffs, and discussions about a ceasefire in Ukraine continue to exert downward pressure on oil prices. Analysts remain cautious about the broader implications for future energy demand.
Original Source: shafaq.com
