Oil Prices Rise Amid Middle East Tensions
Concerns and Gains
Oil prices saw an uptick in Tuesday’s trading session due to escalating tensions in the Middle East. However, these gains were tempered by apprehensions surrounding demand, particularly with monthly reports from oil agencies looming. Prices for May delivery rose by 0.6% to $82.69 a barrel, while the April contract increased by 0.5% to $78.33.
Geopolitical Unrest
Despite hopes for a ceasefire in the Israel-Hamas conflict fading, negotiations remain at a standstill in Cairo. The situation is further complicated by ongoing exchanges of fire between Israel and Lebanon’s Hezbollah. Additionally, Yemen’s Houthis have been targeting ships in solidarity with Palestinians, contributing to the geopolitical turmoil.
Supply Disruptions and Attacks
While the Gaza conflict hasn’t significantly impacted oil supply, the Houthis’ attacks in the Red Sea and Gulf of Aden pose a threat. Recent airstrikes in Yemen and a Ukrainian attack on energy facilities in Russia have also added to the instability in the oil market.
Market Sentiment
Traders are adapting to the persistent attacks, with concerns shifting towards the demand outlook and rising non-OPEC supply. The International Energy Agency anticipates record-high oil supply, primarily driven by non-OPEC producers, including the United States, Brazil, and Guyana.
Chinese Demand and Market Outlook
China’s crude imports have shown fluctuations, with a slight increase in the first two months of the year compared to 2023. However, overall purchases have been on a downward trend, reflecting softer demand. Analysts are awaiting demand estimates from OPEC, the IEA, and the Energy Information Administration for further insights on market dynamics.
