Oil Prices Hit Turbulence: Middle East Tensions & China Stimulus Shake Markets
Crude oil prices saw a modest uptick on Tuesday, fueled by escalating geopolitical instability in the Middle East and fresh economic stimulus from China.
However, broader concerns about global economic growth and ongoing trade tensions limited gains.
A key driver behind the rally was the U.S. military’s continued strikes on Houthi rebels in Yemen, a move aimed at securing Red Sea shipping routes. ING analysts noted that alongside these geopolitical risks, China’s new domestic consumption action plan—which includes income boosts and childcare subsidies—provided additional support for oil prices.
Adding to the bullish sentiment, China’s economic data exceeded expectations. Retail sales grew faster than anticipated, and fixed asset investment showed resilience. While factory output struggled and unemployment hit a two-year high, the world’s largest oil importer maintained strong crude demand.
China’s crude oil throughput rose 2.1% in January and February.
Beijing’s stimulus efforts aim to bolster consumer spending.
Middle East tensions continue to disrupt supply expectations.
Despite these factors, headwinds persist. The OECD warned that U.S. tariffs may slow economic growth in North America, indirectly dampening global energy demand. Additionally, Venezuela’s PDVSA is preparing to sustain exports beyond Chevron’s U.S. license expiration, which could keep supply pressures elevated.
U.S.-Russia Talks & Their Impact on Oil Prices
Markets are closely watching diplomatic efforts between the U.S. and Russia, particularly discussions regarding Ukraine peace negotiations. If talks result in easing sanctions on Russia, the reintroduction of Russian crude into global markets could weigh on prices.
In a parallel development, Venezuelan oil production remains a wildcard. The potential expiration of Chevron’s license to operate joint ventures with PDVSA could influence supply dynamics, depending on whether U.S. sanctions are reinstated or relaxed.
While supply concerns continue to evolve, demand-side uncertainty is growing. Economists have flagged that a prolonged U.S.-China trade conflict, alongside a potential slowdown in North American GDP growth, could act as a drag on oil prices.
WTI Crude Oil Price Outlook – Breakout Imminent?
WTI crude oil is currently trading at $67.61, consolidating within a symmetrical triangle pattern on the 2-hour chart. The 50-period EMA at $67.20 is acting as a support level, while key resistance sits at $68.06.
A breakout above $68.06 could fuel gains toward $68.72 and $69.43, where sellers might step in. On the downside, immediate support is seen at $66.36, with further losses targeting $65.29 and $64.32 if bearish momentum picks up.
Resistance Levels: $68.06, $68.72, $69.43
Support Levels: $66.36, $65.29, $64.32
Key Indicator: 50 EMA holding at $67.20
The market remains in wait-and-see mode, with traders closely monitoring geopolitical risks, economic data, and potential supply shifts. A decisive breakout above $68.06 or a drop below $66.36 will likely determine the next major move in WTI crude prices.
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