KEY POINTS
- Oil prices rose as the U.S. struck Houthi targets in Yemen.
- China’s positive economic data helped boost demand expectations.
- The Houthi conflict and China’s recovery impact global oil markets.
Oil prices saw a slight increase on Monday as tensions escalated in the Middle East and positive economic data from China fueled hopes of rising global demand.
The U.S. military launched strikes against Houthi rebels in Yemen over the weekend in response to the group’s attacks on Red Sea shipping routes.
U.S. President Donald Trump vowed that the strikes would continue until the Houthis cease their assaults on shipping, a campaign that could extend for weeks, according to a U.S. official.
Brent futures rose 28 cents, or 0.4 percent, to $70.85 a barrel by 11:25 a.m. ET (15:25 GMT). Meanwhile, U.S. West Texas Intermediate crude climbed 22 cents, or 0.3 percent, to $67.39 per barrel.
This move comes as China’s economic data showed a positive trend. Despite some weak refining margins, China’s retail sales showed signs of recovery in January and February, which helped increase optimism about demand growth.
China saw its crude oil throughput increase by 2.1 percent when compared to last year, thus boosting future oil price growth.
Escalating risks from Houthi conflict impact global markets
The ongoing attacks by Houthi rebels against key shipping lanes has generated international concerns about worldwide oil supply stability in the oil-rich waters of the Red Sea.
Monday attacks on Hodeidah harbor together with Al Jawf governorate worsened concerns about future trade and petroleum transport interruptions throughout the area.
According to Reuters, the U.S. military’s intervention has added to the already heightened risks in the region.
However, analysts point to China’s economic recovery as a balancing factor, boosting the outlook for oil demand despite the geopolitical risks.
“The combination of increased stimulus from China and the heightened attack by the Houthi rebels is providing a significant boost to oil prices,” said Phil Flynn, senior analyst at Price Futures Group.
China’s economic recovery boosts oil demand outlook
China’s economic data also played a role in the slight upward movement of oil prices. Retail sales growth has recently increased to show better domestic consumer behavior that supports international oil market needs.
Analysts predict a positive economic recovery for China regardless of increasing trade war tensions between the U.S. and multiple nations.
Increased stimulus measures in China are expected to help lift demand for oil, especially as the country recovers from pandemic-related disruptions.
Despite some pressure from OPEC+ production increases, U.S. sanctions on Iran are likely to keep markets tight, offsetting the rise in output.
As a result, oil prices remain supported by both geopolitical events and China’s economic resilience.
