Oil prices were relatively flat in early trading on Tuesday as global economic uncertainties, U.S. tariffs, and ongoing talks over a Russia-Ukraine ceasefire dampened the impact of escalating instability in the Middle East.
- Brent crude rose by 10 cents, or 0.14%, to $71.17 per barrel.
- West Texas Intermediate (WTI) crude gained 7 cents, or 0.1%, to $67.65 per barrel.
Independent market analyst Tina Teng noted that the economic uncertainties, particularly surrounding weak global demand, outweighed the geopolitical risks. “China’s positive data needs to be sustained to gain market confidence,” she said, highlighting that although China’s retail sales showed growth in early 2025, there were concerns over falling factory output and rising unemployment.
China’s Economic Data and Impact on Oil Demand
Chinese retail sales data showed a quickening of growth in January-February, which sparked some optimism. However, factory output declined, and the urban unemployment rate hit its highest level in two years, signaling broader economic weakness. This mixed economic picture raised doubts about the sustainability of the demand recovery in China, the world’s largest oil importer.
Geopolitical and Supply Concerns
In the Middle East, rising instability, particularly related to the ongoing conflict in Yemen, continues to support oil prices. President Donald Trump has vowed to continue the U.S. military offensive against Yemen’s Houthis unless the group ends its attacks on shipping in the Red Sea. At the same time, tensions related to the Russia-Ukraine war remain high, with talks between President Trump and Russian President Vladimir Putin focusing on a potential ceasefire. A peace agreement could lead to an easing of sanctions on Russia and a return of Russian crude to the global market, which could weigh on oil prices.
Tariffs and Global Growth Risks
Further pressuring oil prices, concerns about global economic growth have resurfaced. The OECD warned that U.S. tariffs would negatively impact growth in North America, which in turn would dampen global energy demand. Additionally, Venezuela’s state-run PDVSA is making plans to continue oil production and exports despite the looming expiration of Chevron’s U.S. license next month, further increasing global supply.
Middle East Ceasefire
In another geopolitical development, Lebanon and Syria agreed to a ceasefire following recent clashes that left 10 dead. Although Syria is not a major oil producer, the situation adds to concerns about regional instability, potentially impacting oil supply in the Middle East.
Market Outlook While geopolitical risks, such as the conflict in the Middle East and the Russia-Ukraine talks, continue to offer some support for oil prices, the broader outlook remains cautious due to concerns about global demand and economic growth. Analysts predict that oil prices could eventually dip into the mid-$60 range as trade wars and tariffs negatively affect consumption.
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