Oil prices ticked up on Tuesday as heightened instability in the Middle East and China’s latest economic stimulus efforts fueled market optimism. However, concerns over global growth, U.S. tariff policies, and Russia-Ukraine ceasefire talks tempered gains.
Brent crude futures rose $0.17 (0.2%) to $71.24 per barrel, while West Texas Intermediate (WTI) crude gained $0.14 (0.2%) to $67.72 per barrel by 03:50 GMT.
Investors closely monitored renewed U.S. military actions in the region, as well as China’s measures to stabilize economic growth. “China’s stronger-than-expected retail sales and fixed asset investment data provided crucial support to oil markets,” analysts at ING stated in a research note.
China’s Economic Stimulus Supports Market Sentiment
China’s State Council introduced a special action plan aimed at boosting domestic consumption. The measures include income growth initiatives and childcare subsidies, both of which are designed to accelerate economic recovery.
- Retail sales in China grew faster than expected in January and February.
- Crude oil throughput in China increased 2.1% year-over-year for the first two months of 2025, bolstered by rising demand during the holiday travel season.
- However, factory output declined and the urban unemployment rate hit its highest level in two years, signaling underlying economic challenges.
Despite mixed economic indicators, China’s demand outlook remains a key driver for global energy markets, with refinery activity indicating continued appetite for crude imports.
Geopolitical Risks Keep Oil Markets on Edge
Tensions in the Middle East continued to provide underlying support to crude prices. U.S. President Donald Trump reaffirmed military actions against Yemen’s Houthi rebels, warning of further strikes unless attacks on shipping routes in the Red Sea cease.
Meanwhile, the Israel-Gaza conflict escalated, with Israeli airstrikes killing at least 200 people, according to Palestinian health officials. The latest attacks mark an end to a weeks-long ceasefire that had temporarily paused hostilities since January.
Additional factors influencing market sentiment:
- Trump’s tariff proposals targeting China, Europe, Canada, and Mexico have raised concerns about slowing global energy demand.
- The OECD warned on Monday that new tariffs could curb growth in the U.S. and major trading partners, weighing on oil consumption.
- Venezuela’s PDVSA plans to continue crude exports from its Chevron joint venture, despite uncertainty over U.S. sanctions.
In a separate development, markets remain focused on diplomatic talks between Trump and Russian President Vladimir Putin regarding a potential resolution to the Russia-Ukraine war. Any progress toward a ceasefire could lead to a relaxation of sanctions, potentially bringing more Russian crude back into the global market.
With ongoing geopolitical uncertainty and economic stimulus measures in play, oil prices remain volatile. Market participants will be closely watching upcoming U.S. Federal Reserve policy decisions and further developments in global trade relations.