By Oil prices increased on Tuesday following news of monetary stimulus from China, the world’s largest oil importer, and concerns that ongoing conflicts in the Middle East might disrupt regional supply. Additionally, a looming hurricane threatened oil supply in the United States, the biggest crude producer.
By 0853 GMT, Brent crude futures rose by $1.34 (1.8%) to reach $75.24 per barrel, while U.S. WTI crude futures climbed $1.38 (2%) to $71.75. “The crude oil market has been eagerly looking towards Chinese authorities for further easing measures to address the economic slowdown,” noted IG market analyst Tony Sycamore.
Earlier, China’s central bank announced its most substantial stimulus package since the COVID-19 pandemic, aimed at reviving the economy from deflation and aligning with the government’s growth targets. The comprehensive package includes increased funding and interest rate cuts, reflecting Beijing’s effort to restore confidence after a series of disappointing economic data raised concerns about a prolonged structural slowdown. Sycamore added that this announcement could help mitigate some downside risks for crude oil prices.
However, for the recent oil price rally to sustain, analysts like Kelvin Wong from OANDA emphasize that China’s monetary easing must be complemented by fiscal policies to enhance domestic demand.
In the Middle East, Israel’s military launched airstrikes against Hezbollah positions in Lebanon, resulting in at least 492 fatalities and displacing tens of thousands. These strikes heighten the risk of escalating tensions with Iran, a key OPEC producer that supports Hezbollah, potentially leading to a wider conflict in the region.
Meanwhile, U.S. oil producers are evacuating staff from offshore oil production platforms in the Gulf of Mexico as the second hurricane in two weeks is expected to impact oil fields, prompting some companies to suspend operations.
