(Reuters) – Oil prices rose more than 1% on Tuesday to their highest levels since the beginning of the month, supported by instability in the Middle East and China’s plans for more economic stimulus.
Brent futures climbed 84 cents, or 1.2%, to $71.91 a barrel by 0911 GMT, while U.S. West Texas Intermediate crude futures also rose 84 cents, 1.2%, to $68.42.
Oil prices gained support from President Donald Trump’s vow to continue the U.S. assault on Yemen’s Houthis unless they end their attacks on ships in the Red Sea.
Trump said on Monday he would hold Iran responsible for any attacks carried out by the Houthi group that it backs in Yemen.
Meanwhile, Israeli air strikes in Gaza killed at least 200 people, Palestinian health authorities said, as attacks on Tuesday ended a weeks-long standoff over extending a ceasefire that halted fighting in January.
“Along with U.S. strikes on the Houthis in Yemen, several factors provided support to the market,” ING analysts said in a research note.
“China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected.”
The state council, or cabinet, unveiled on Sunday a special action plan to boost domestic consumption, with measures such as increasing incomes and offering childcare subsidies.
Crude oil throughput in China, the world’s biggest crude importer, rose 2.1% in January and February from a year earlier, supported by a new refinery and Lunar New Year holiday travel, official data showed on Monday.
The OECD said on Monday that Trump’s tariffs would drag down growth in the United States, Canada and Mexico, and weigh on global energy demand.
“With global supply surging and tariffs and trade wars set to hit global demand, we remain of the view that prices will head lower and eventually reach the mid $60s,” said Robert Rennie, head of commodity and carbon strategy at Westpac.
Further adding to global supply, Venezuela’s state-run PDVSA has put together three operational scenarios indicating it plans to continue producing and exporting oil from its joint venture with Chevron after the U.S. major’s licence expires next month, according to a company document reviewed by Reuters on Monday.
Talks on Tuesday between Trump and Russian President Vladimir Putin about ending the Ukraine war were also in focus.
Markets believe a potential peace negotiation would involve the easing of sanctions on Russia and the return of its crude supply to global markets, weighing on prices.
Reporting by Colleen Howe in Beijing, Emily Chow in Singapore and Paul Carsten in London; Editing by Jacqueline Wong, Clarence Fernandez, Kim Coghill and Ed Osmond
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