Oil News: Crude Jumps on Middle East Supply Fears and China’s Demand Boost

Oil Prices Edge Higher on Mideast Risks, China Stimulus

Light crude oil futures are trading slightly higher on Tuesday, maintaining a tight range within Monday’s price action. The market shows signs of impending volatility with a bullish bias.

Upside momentum could drive prices toward the short-term pivot at $68.97, with further gains potentially testing the 200-day moving average at $70.11. On the downside, minor support has moved up to $66.58.

At 08:45 GMT, Light Crude Oil Futures are trading $68.06, up $0.69 or +1.02%.

Geopolitical Risks and China’s Stimulus Bolster Oil Prices

Oil prices are finding support from escalating geopolitical tensions in the Middle East and fresh stimulus measures in China. U.S. strikes on Yemen’s Houthis, along with renewed conflict between Israel and Palestine, are fueling concerns over potential disruptions in global crude supply. In Gaza, Israeli air strikes killed at least 200 people, ending a temporary ceasefire that had been in place since January.

Meanwhile, China’s government unveiled a new action plan to stimulate domestic consumption, including income-boosting measures and childcare subsidies. Official data showed that retail sales growth exceeded expectations in January-February, while crude oil throughput in China—the world’s largest crude importer—rose 2.1% year-over-year. However, weaker factory output and a rising unemployment rate tempered optimism.

U.S. Tariffs and Global Supply Growth Pose Downside Risks

Despite geopolitical and economic support, oil prices face headwinds from global supply concerns and trade uncertainty. The Organization for Economic Cooperation and Development (OECD) warned that tariffs imposed by the U.S. on key trading partners could drag down growth in North America, ultimately weighing on global energy demand.

Venezuela’s PDVSA is also preparing for continued oil production and exports through its joint venture with Chevron, even as the U.S. major’s license is set to expire next month. If Venezuelan crude continues to flow into global markets, it could further contribute to oversupply.

Ukraine Ceasefire Talks and Market Sentiment

Oil traders are closely watching ongoing discussions between U.S. and Russian leaders over the Ukraine conflict. Any peace negotiations could lead to the easing of sanctions on Russia, potentially bringing more crude supply back to global markets, which would put downward pressure on prices.

Market Outlook: Cautiously Mixed

Oil prices are currently supported by geopolitical risks and China’s economic stimulus, but upside momentum remains fragile given persistent concerns about global supply growth and trade uncertainties.

While short-term gains are possible, especially if tensions in the Middle East escalate or Chinese demand strengthens further, downside risks from increased supply and potential easing of Russian sanctions could cap rallies.

Traders should watch for key technical levels, with a break above $70 signaling further upside, while renewed selling pressure could push prices back toward the mid-$60s.

More Information in our Economic Calendar.