Oil prices experienced a notable increase on Tuesday, driven by China’s announcement of monetary stimulus and escalating concerns about Middle Eastern conflicts affecting regional supply. Additionally, a new hurricane threatened production in the United States, the world’s leading crude producer.
By 0853 GMT, Brent crude futures had risen by $1.34, or 1.8%, reaching $75.24 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures increased by $1.38, or 2%, settling at $71.75.
“The crude oil market has been looking desperately towards Chinese authorities for further easing measures to counter the economic slowdown,” stated Tony Sycamore, an IG market analyst. Earlier, China’s central bank unveiled its most significant stimulus package since the COVID-19 pandemic, aimed at revitalizing an economy struggling with deflation and aiming for the government’s growth target.
This unexpected package, which includes increased funding and rate cuts, is part of Beijing’s efforts to restore confidence following disappointing economic data that raised concerns about a prolonged slowdown. “Today’s announcement will go some way to removing downside risks to the crude oil price,” Sycamore added.
However, for the oil price rally to sustain, analysts like Kelvin Wong from OANDA emphasized that China’s monetary easing must be complemented by fiscal policies that stimulate domestic demand.
In the Middle East, tensions escalated as Israel’s military conducted airstrikes against Hezbollah positions in Lebanon, resulting in significant casualties and displacement. This conflict risks involving Iran, an OPEC producer that supports Hezbollah, potentially leading to a broader regional war.
In response to these developments, U.S. oil producers are evacuating personnel from offshore platforms in the Gulf of Mexico as a second hurricane in two weeks is expected to disrupt oil production. Several companies have already halted operations in anticipation of the storm’s impact.
Related topic:
Diesel Fuel vs Furnace Oil: What is the Difference?
