Oil prices rise as geopolitical tension intensifies
Agency report
Oil prices increased on yesterday in the global commodity market as geopolitical tensions escalated. Brent crude rose by 1% to $71.37 per barrel, up from the previous session’s close of $70.67.
US benchmark West Texas Intermediate (WTI) increased by 1.1% to $68 per barrel after closing at $67.27 in the prior session. Israeli airstrikes resumed in Gaza after the ceasefire collapsed, forcing Palestinians in northern and eastern Beit Hanoun to flee toward the city centre.
The renewed conflict has heightened supply concerns in the Middle East, home to a significant portion of the world’s oil reserves, fuelling price gains. Tensions in the Red Sea remain elevated. Oil prices rose yesterday amid rising tensions in the Middle East, continuing the strength seen at the end of last week. Brent settled almost 0.7 per cent higher on the day, moving back above US$71 per barrel.
Along with US strikes on the Houthis in Yemen, several factors provided support to the market. China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected.
Output data suggests that domestic apparent oil demand over January and February averaged 14.7 million b/d, up 2.4% year on year, according to ING. Middle East tensions escalated once again in recent days with US strikes on the Houthis, while the Houthis retaliated by targeting a US aircraft carrier.
The Houthis are backed by Iran, which could lead to a broader escalation, particularly with President Trump saying Iran “will be held responsible and suffer the consequences” if the Houthis continue attacks in the Red Sea.
Trump is scheduled to talk to President Putin today about a proposed ceasefire.
ING analysts said in the note that energy markets will be watching closely for any progress, particularly whether a potential peace deal might include the resumption of some Russian energy flows.
“This would be more impactful for natural gas rather than oil, given that the scope to increase natural gas flows is much bigger relative to oil.” Beyond geopolitical risks, expectations of stronger oil demand from China, the world’s largest crude importer, also contributed to increasing prices.
