Oil prices remained largely unchanged in early Tuesday trading as worries over global economic growth, U.S. tariffs, and Russia-Ukraine ceasefire talks countered concerns over escalating instability in the Middle East.
By 01:35 GMT, Brent crude edged up 10 cents, or 0.14%, to $71.17 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 7 cents, or 0.1%, to $67.65 per barrel.
Market Balancing Between Geopolitical Tensions and Economic Uncertainty
“Fundamentally, economic uncertainties are overshadowing geopolitical risks,” noted independent market analyst Tina Teng. She emphasized that while China’s latest economic data provided some optimism, sustained improvement is needed to bolster market confidence, especially given ongoing global demand concerns amid trade tensions and ceasefire discussions regarding the Ukraine war.
Monday’s economic reports from China painted a mixed picture—while retail sales growth accelerated in the first two months of the year, factory output declined, and the urban unemployment rate climbed to a two-year high.
Geopolitical Developments Impacting Oil Markets
Oil prices found some support from U.S. President Donald Trump’s pledge to continue military strikes against Yemen’s Houthi rebels unless the group ceases attacks on ships in the Red Sea. Meanwhile, attention turned to high-stakes talks on Tuesday between Trump and Russian President Vladimir Putin, aimed at negotiating a potential ceasefire in Ukraine.
Market participants believe that a peace agreement could lead to the easing of Western sanctions on Russia, allowing more Russian crude to return to global markets and exerting downward pressure on oil prices.
Economic Risks and Supply Dynamics
Beyond geopolitical factors, concerns about weakening demand continued to weigh on oil prices. The Organisation for Economic Co-operation and Development (OECD) warned on Monday that Trump’s new tariffs would slow economic growth in the U.S., Canada, and Mexico, further dampening global energy demand.
“With global supply surging and tariffs expected to hit demand, we anticipate oil prices will decline, eventually settling in the mid-$60s per barrel,” said Robert Rennie, head of commodity and carbon strategy at Westpac.
On the supply side, Venezuela’s state-owned oil company PDVSA is preparing operational scenarios to continue producing and exporting crude from its joint venture with Chevron, even as the U.S. major’s license is set to expire next month. A Reuters report on Monday revealed internal company documents outlining PDVSA’s plans to maintain exports despite regulatory uncertainties.
Middle East Stability Efforts
In the Middle East, Lebanon and Syria announced a ceasefire following cross-border clashes that resulted in 10 fatalities over the past two days. While Syria is not a significant oil producer, the broader implications of regional instability have kept investors on edge.
With markets balancing geopolitical risks, supply considerations, and economic uncertainty, oil prices remain in a tight range as investors assess the evolving global landscape.
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