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Oil prices rose by more than 1% on Monday, supported by expectations of economic stimulus from China and geopolitical developments in the Middle East.
China’s Policy Shift Spurs Optimism
Brent crude futures climbed 94 cents, or 1.32%, to $72.06 per barrel by 0852 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained $1, or 1.49%, to $68.20.
Reports from a Politburo meeting indicated that China, the world’s top oil importer, is set to implement a “moderately loose” monetary policy next year, marking the first shift toward easing since 2010. The announcement is seen as a measure to support economic growth as the country faces a prolonged slowdown, largely driven by a struggling property market that has hurt consumer confidence and consumption. This development comes after oil producers group OPEC+ opted last week to delay plans for increased output until April, citing China’s slowdown as a key factor.
Geopolitical Tensions Support Crude Prices
In addition to China’s economic signals, concerns over political instability in Syria further contributed to the rise in oil prices. The fall of Syrian President Bashar al-Assad, as reported by Syrian rebels on Sunday, raised fears of renewed instability in the Middle East. Given the region’s significance to global oil supply, the uncertainty surrounding Syria has added a risk premium to crude prices.
Saudi Aramco Adjusts Pricing Amid Demand Concerns
In other market news, Saudi Aramco, the world’s top oil exporter, lowered its January 2025 prices for Asian buyers to the lowest levels since early 2021. This move, although a sign of weakening demand, has not dampened oil price optimism in the short term, as the broader market focuses on stimulus and geopolitical risks.
Looking Ahead: U.S. Inflation Data in Focus
Investors are also preparing for a busy week of economic data, including a key U.S. inflation report on Wednesday. The report is expected to provide further insights into the Federal Reserve’s stance on interest rates, which could have implications for global oil demand and market sentiment.
As oil markets respond to both macroeconomic developments and geopolitical risks, traders remain focused on the evolving situation in China and the Middle East, along with upcoming economic data from the U.S.
