Onome Amuge
Oil rose over one percent on Tuesday, hitting its highest levels since the beginning of the month, underpinned by persistent tensions in the Middle East and China’s pledge for additional economic stimulus measures.
The increase, according to analysts, was driven by investor optimism surrounding China’s plans to inject new life into its economy through a series of stimulus packages, in a bid to offset the impact of the ongoing trade dispute with the U.S.
Brent crude futures surged 1.2 percent, gaining 84 cents to settle at $71.91 a barrel, while U.S. West Texas Intermediate (WTI) crude futures climbed 84 cents, or 1.2 percent, to $68.42 a barrel.
Oil prices received a boost on Tuesday as President Donald Trump warned of continued military action against the Yemen-based Houthi militia. Trump’s announcement, which came on the heels of a vow to hold Iran responsible for Houthi attacks against U.S. assets, intensified market uncertainty and tensions in the region.
Adding to the volatility in the oil market, the situation in the Middle East escalated on Tuesday as Israeli air strikes in Gaza resulted in heavy casualties.
According to Palestinian health officials, at least 200 people were killed in the strikes, which came in the aftermath of a failed attempt to extend a ceasefire agreement that had halted hostilities between Israel and Hamas since January.
China, the world’s largest oil importer, reported a 2.1 percent increase in crude oil throughput during the combined months of January and February compared to the same period last year, according to official data released on Monday.
The uptick in Chinese crude oil processing was attributed to the opening of a new refinery and higher holiday travel demand during the Lunar New Year. Meanwhile, the Organization for Economic Cooperation and Development (OECD) cautioned that President Trump’s tariffs could weigh heavily on economic growth in the U.S., Canada, and Mexico, resulting in decreased energy demand.
The prospect of a potential peace deal between the U.S and Russia over the Ukraine conflict has kept markets on edge, with the outcome of Tuesday’s discussions between President Trump and Russian President Vladimir Putin a focal point.
