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Oil prices surged over 1% on Tuesday, reaching their highest levels since early March, as geopolitical instability in the Middle East and China’s economic stimulus measures fueled market sentiment.
As of 09:11 GMT:
- Brent crude rose $0.84 (1.2%) to $71.91 per barrel
- West Texas Intermediate (WTI) crude gained $0.84 (1.2%) to $68.42 per barrel
Geopolitical Risks Drive Oil Gains
Oil markets found support following U.S. President Donald Trump’s warning that the U.S. would continue strikes on Yemen’s Houthi rebels unless they ceased attacks on commercial ships in the Red Sea. Trump also held Iran responsible for any Houthi-led strikes, further heightening geopolitical tensions.
Meanwhile, Israeli airstrikes in Gaza on Tuesday killed at least 200 people, according to Palestinian health authorities. The attacks ended a prolonged ceasefire standoff that had paused fighting since January.
China’s Economic Stimulus Supports Oil Demand
Adding to oil’s bullish momentum, China’s State Council (cabinet) announced a special action plan to boost domestic consumption. Measures include:
- Income increases
- Childcare subsidies
Additionally, China’s crude oil throughput rose 2.1% year-over-year in January and February, driven by a new refinery launch and increased travel during the Lunar New Year holiday, according to official data released Monday.
Global Supply and Demand Dynamics
The OECD warned on Monday that Trump’s tariffs on key trade partners—including Canada and Mexico—could slow economic growth and dampen global energy demand.
Meanwhile, Venezuela’s state-owned oil company PDVSA is preparing three operational scenarios to maintain oil production and exports with Chevron (NYSE: CVX), despite the U.S. major’s license set to expire next month, according to a Reuters report.
Market Eyes Trump-Putin Talks on Ukraine
Oil traders are also closely watching talks between Trump and Russian President Vladimir Putin on Tuesday regarding a potential peace agreement in Ukraine.
Markets anticipate that a ceasefire deal could lead to:
- Eased sanctions on Russia
- Increased Russian crude supply in global markets
These factors could exert downward pressure on oil prices in the coming weeks.
