Brent moves higher amid hopes of Chinese economic stimulus

The front-month ICE Brent contract has gained $0.27/bbl on the day, to trade at $72.22/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent’s price moved higher, following an escalation of conflict in the Middle East, with the fall of Syria’s President Bashar al-Assad and his government.

The situation in the Middle East could quickly escalate if major neighbouring oil producers like Iraq and Iran get directly involved in the conflict, market analysts said.

“Oil prices are on the rise as the Assad regime in Syria falls raising questions about the geopolitical risk factors going forward,” Price Futures Group’s senior market analyst Phil Flynn remarked.

Additionally, oil prices gained on hopes of a Chinese stimulus, after the country’s top leaders pledged a shift from a “prudent” to a “moderately loose” monetary policy for 2025. The economic stimulus is expected to drive oil demand higher.

A moderately loose monetary policy could mean interest rate cuts or reserve requirement ratio cuts, among other measures.

“Oil prices ticked up overnight, fueled by a cocktail of geopolitical tensions in the Middle East and anticipation of China's planned economic stimulus,” SPI Asset Management’s managing partner Stephen Innes said.

Downward pressure:

While the conflict in Syria brings some uncertainty in the region, its effect on the broader Middle East oil supply is currently unclear, given Syria's small contribution to global oil production.

“The oil market appears divided on what risk premium to assign to the Syrian war, if any, for its potential to spiral out into a wider Mideast conflict,” VANDA Insights’ founder and analyst Vandana Hari said.

Contrary to oil fundamentals, OPEC+’s latest decision to extend oil supply cuts through the first quarter of 2025 has reflected its cautious outlook on global oil demand growth for next year and put some downward pressure on oil prices.

By Aparupa Mazumder

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