Oil Prices Experience Minor Increase Amidst Geopolitical and Economic Influences
Oil prices rose slightly due to Middle East instability and China’s stimulus efforts, though concerns about global growth, U.S. tariffs, and other geopolitical events tempered gains. Analysts forecast potential price declines amid rising supply and demand uncertainties.
Oil prices experienced a slight increase on Tuesday, buoyed by geopolitical instability in the Middle East and China’s stimulus initiatives, despite ongoing global growth concerns, U.S. tariffs, and ceasefire negotiations in the Russia-Ukraine conflict. By 0350 GMT, Brent futures rose by 17 cents, or 0.2%, reaching $71.24 a barrel, while U.S. West Texas Intermediate crude futures increased by 14 cents, or 0.2%, to $67.72 a barrel.
According to ING analysts, multiple factors supported the oil market, including U.S. military actions against the Houthis in Yemen. They pointed out that China announced plans to enhance domestic consumption, displaying stronger-than-expected retail sales and fixed asset investment growth. The Chinese state council introduced a special action plan aimed at stimulating consumption through income increases and childcare subsidies.
Chinese economic data released recently indicated a surge in retail sales growth for January and February, despite declining factory output and the urban jobless rate hitting a two-year high. Additionally, crude oil throughput in China rose by 2.1% year-on-year due to a new refinery and increased holiday travel.
Support for oil prices also stemmed from President Donald Trump’s commitment to maintain military actions against Yemen’s Houthis unless their maritime attacks cease. In contrast, the ongoing conflict between Israel and Palestine escalated, with Israeli strikes reportedly resulting in over 200 fatalities, complicating the geopolitical landscape.
The OECD reported ongoing concerns regarding demand, projecting that Trump’s tariffs might hinder economic growth across the United States, Canada, and Mexico, consequently affecting global energy consumption. Robert Rennie, head of commodity and carbon strategy at Westpac, stated that with rising global supply and trade disputes, pricing may eventually decline into the mid-$60s range.
Furthermore, Venezuela’s PDVSA indicated its intent to continue producing oil alongside Chevron despite the expiration of the U.S. company’s operating license next month. Concurrently, discussions between President Trump and Russian President Vladimir Putin regarding peace talks in Ukraine have captivated market attention. Investors fear that any resolution might lead to the lifting of sanctions on Russia, thereby impacting crude oil prices adversely.
In summary, oil prices have seen a minor uptick due to geopolitical tensions in the Middle East and favorable Chinese economic policies, counterbalanced by international growth concerns and trade uncertainties. Analysts continue to project potential downward pressures on prices, attributed to surging global supply and tariffs affecting demand. As the situation progresses, factors such as geopolitical stability and economic indicators from key markets will remain critical in determining future oil price trends.
Original Source: shafaq.com
