HOUSTON: Oil prices edged higher on Monday after the United States vowed to keep attacking Yemen’s Houthis until the Iran-aligned group ends its assaults on shipping while Chinese economic data fuelled hopes for higher demand.
US President Donald Trump launched military strikes against the Houthis on Saturday over the group’s attacks against Red Sea shipping. One US official told Reuters the campaign might continue for weeks. Brent futures rose 28 cents, or 0.4%, to $70.85 a barrel by 11:25 a.m. ET (15:25 GMT) while US West Texas Intermediate crude futures gained 22 cents, or 0.3%, to $67.39.
The Red Sea port city of Hodeidah and the Al Jawf governorate north of the capital Sanaa were targeted on Monday, the Houthis’ Al Masirah TV said. Chinese economic data also supported prices. Retail sales growth quickened over January-February in a welcome sign for policymakers seeking to boost domestic consumption, though unemployment rose and factory output eased.
China’s crude oil throughput in January and February rose 2.1% versus a year earlier, official data showed on Monday, supported by a new refinery and holiday travel, but weak refining margins persisted. “The combination of increased stimulus from China and the heightened attack by the Houthi rebels is providing a significant boost (to oil) this morning,” said Phil Flynn senior analyst with Price Futures Group. Oil rose slightly last week, though Brent is still down almost 5% this year on concern over a global economic slowdown driven by escalating trade tensions between the US and other nations.
OPEC+ oil producers’ plan to raise oil output from April has also pressured prices. However, the prospect of tighter US sanctions against Iran more than offsets the gradual OPEC+ production increase, said Saxo Bank’s Ole Hansen.
“China’s plans to boost consumption and fresh Red Sea risks” are supporting the market on Monday, he added. Meanwhile, Trump said he would speak to Russian President Vladimir Putin on Tuesday about ending the Ukraine war, with territorial concessions by Kyiv and control of the Zaporizhzhia nuclear power plant expected to feature prominently in the talks.
“The negative to crude is focused on the tariffs and a Russia/Ukraine peace negotiation which would likely increase Russian crude to the world market.”
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