Brent rises on Middle Eastern instability and China’s economic stimulus plans
The front-month ICE Brent contract has moved $0.70/bbl higher on the day, to trade at $71.87/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
Brent's price rose on the back of instability in the Middle East and China's plans for additional economic stimulus.
US President Donald Trump vowed to continue strikes against Yemen’s Houthis unless they halt their attacks on ships in the Red Sea. On Monday, Trump stated he would hold Iran responsible for any attacks carried out by the Houthi armed group, which it backs in Yemen. This contributed to the rise in Brent futures.
Oil prices were “aided by concerns of a wider Middle East conflict,” said ANZ Bank’s senior commodity strategist Daniel Hynes.
“Along with US strikes on the Houthis in Yemen, several factors provided support to the market,” analysts from ING Bank said.
Meanwhile, Israeli airstrikes in Gaza killed at least 200 people, Reuters reported citing Palestinian health authorities. Tuesday’s attacks ended a week-long standoff over extending a ceasefire deal that had paused fighting since January.
China’s State Council announced a “special action plan” aimed at boosting domestic consumption, including measures to increase residents’ income, Reuters reported.
“China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected,” the ING Bank analysts noted.
Downward pressure:
Oil investors' focus is now on talks between US President Donald Trump and Russian President Vladimir Putin later today on ending the Ukraine war.
Market analysts believe a potential peace deal could ease sanctions on Russia and bring its crude supply back to the global market, putting downward pressure on prices.
“Trump is scheduled to talk to President Putin today about a proposed ceasefire. Energy markets will be watching closely for any progress -- particularly whether a potential peace deal might include the resumption of some Russian energy flows,” two ING Bank analysts commented.
By Tuhin Roy
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