On Tuesday, oil prices rose due to Middle Eastern tensions and China’s economic support plans. Brent crude reached $71.43 and WTI $67.90. Factors include U.S. airstrikes in Yemen, increased Chinese consumption, and volatility in the Israeli-Palestinian conflict, amidst concerns about global economic growth and tariffs affecting demand.
Oil prices experienced an increase on Tuesday as tensions in the Middle East persisted and China announced measures to stimulate its economy. Brent crude futures climbed by 0.5%, reaching $71.43 per barrel, while U.S. West Texas Intermediate crude futures gained 0.5%, attaining $67.90 per barrel. However, concerns regarding global economic growth, U.S. tariffs, and uncertainties surrounding ceasefire negotiations in Ukraine tempered the upward movement in prices.
According to analysts at ING, several factors contributed to the rise in oil prices. Notably, U.S. airstrikes targeting Houthi positions in Yemen and China’s recent plan to bolster domestic consumption, which includes increasing incomes and offering childcare subsidies, played significant roles. Furthermore, economic data released on Monday indicated stronger-than-expected retail sales growth but highlighted a decline in industrial production and a rise in urban unemployment to a two-year high.
In China, oil consumption surged by 2.1% during the first two months of the year, bolstered by the operation of a new refinery and heightened demand from the Lunar New Year celebrations. This uptick in refinery activity reflects China’s status as the world’s largest oil importer and contributes positively to global oil demand amidst ongoing geopolitical tensions.
The geopolitical landscape remains fraught, as U.S. President Trump warned of further military actions against the Houthis if attacks on Red Sea shipping continued. He indicated that Iran would be held accountable for any further assaults. Additionally, escalating violence in the Israeli-Palestinian conflict led to significant casualties in Gaza, disrupting a recently established ceasefire.
The Organization for Economic Cooperation and Development (OECD) cautioned that Trump’s tariffs could have detrimental effects on growth across the U.S., Canada, and Mexico, which might, in turn, restrict global energy demand. Conversely, the Venezuelan oil company PDVSA is poised to continue its oil exports through a partnership with Chevron, even after a crucial U.S. license expires next month.
Market participants are also keenly awaiting discussions between President Trump and Russian President Putin regarding the war in Ukraine, as any agreement could lead to a relaxation of sanctions on Russia and allow its oil supply back into the global market, possibly exerting downward pressure on prices.
In summary, rising oil prices are primarily driven by escalating geopolitical tensions in the Middle East, China’s economic stimulus efforts, and variations in global oil consumption. While potential peace negotiations regarding the conflict in Ukraine may alter market dynamics, current insecurity remains prevalent. Moreover, trade tariffs imposed by the U.S. might hamper growth, impacting global demand for energy resources.
Original Source: www.jordannews.jo
