SINGAPORE (Reuters) – Oil prices climbed by 1% on Monday, bolstered by encouraging manufacturing data from China, the world’s largest crude importer, which sparked renewed optimism about global fuel demand. However, concerns over potential U.S. tariffs continued to cast a shadow on the global economic outlook.
Brent crude rose by 76 cents, or 1%, to $73.57 per barrel at 0206 GMT, while U.S. West Texas Intermediate (WTI) crude increased by 75 cents, or 1.1%, to $70.51 per barrel.
The price uptick came after official data released on Saturday indicated that China’s manufacturing sector expanded at the fastest pace in three months in February, driven by higher new orders and increased purchase volumes. This growth led to a significant rise in production. Investors are now looking to China’s annual parliamentary meeting, starting on March 5, for additional policy measures aimed at supporting the country’s struggling economy.
IG market analyst Tony Sycamore highlighted that the recovery of China’s National Bureau of Statistics (NBS) manufacturing Purchasing Managers’ Index (PMI) into expansion territory was a key factor in driving the price increase.
Despite the positive data, concerns about the broader economic landscape linger, particularly with the U.S. set to impose new tariffs on Chinese exports starting March 4.
Goldman Sachs analysts offered a more optimistic view of China’s economic prospects, stating in a note that the data points to stable to slightly better economic activity for early 2025. However, they cautioned that the additional 10% U.S. tariff could provoke retaliatory actions from China, which would add uncertainty to the market.
In the previous month, both Brent and WTI experienced their first monthly decline in three months, as the threat of U.S. tariffs and global trade tensions undermined investor confidence in global economic growth, diminishing their appetite for riskier assets.
The overall sentiment showed signs of improvement following a European summit on Sunday, where leaders expressed strong support for Ukrainian President Volodymyr Zelensky. European leaders vowed to intensify efforts to aid Ukraine, just two days after tensions between Zelensky and U.S. President Donald Trump had escalated, with Zelensky cutting his visit to Washington short.
Zelensky indicated on Sunday that while his relationship with Trump had been strained, he was open to repairing it and continuing behind-the-scenes discussions. He also expressed confidence that the U.S. would be ready to sign a minerals deal with Ukraine.
Meanwhile, ongoing attacks on Russian refineries have raised concerns over potential disruptions to Russia’s refined oil product exports. A fire was reported at a refinery in Ufa, Russia, further heightening worries.
Looking ahead to 2025, analysts have largely maintained their oil price forecasts, with Brent crude expected to average $74.63 per barrel. They anticipate that any negative impact from additional U.S. sanctions could be offset by strong oil supply levels and the potential for a peace deal between Russia and Ukraine, according to a Reuters poll.
In Iraq, the U.S. has urged the country to resume oil exports from the semi-autonomous Kurdistan region. However, eight international oil companies operating in the region announced on Friday that they would not restart shipments through the Turkish port of Ceyhan, citing uncertainty over commercial agreements and concerns about payment guarantees for both past and future exports.
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