Oil prices experienced an uptick following a notable weekly surge, fueled by a combination of robust macro-economic indicators from China and heightened geopolitical tensions stemming from Ukrainian attacks on Russian refineries.
The global benchmark Brent approached the $86 per barrel mark, building on a 4% gain from the previous week, while West Texas Intermediate (WTI) stood above $81. China, as the world’s largest oil importer, reported stronger-than-expected growth in factory output and investment at the outset of the year, as revealed by figures on Monday.
In a separate development, Russia encountered drone strikes targeting multiple plants over the weekend, some located deep within the country’s borders. The attacks coincided with Vladimir Putin’s victory in a presidential election, adding another layer of complexity to an already tense geopolitical landscape.
Crude oil has broken free from a prolonged period of narrow trading ranges that characterized the early months of the year, recently reaching its highest levels since November. This surge is primarily supported by production cuts enforced by OPEC+ and predictions of a global deficit in oil supply for the current year. Consequently, major financial institutions such as Morgan Stanley have adjusted their oil price forecasts upward to reflect this changing market sentiment.
The confluence of China’s economic resilience and geopolitical uncertainties in key oil-producing regions underscores the delicate balance influencing oil markets. While positive economic indicators from China signal potential demand resilience, geopolitical unrest in regions like Russia and Ukraine introduces significant supply-side risks.
Looking ahead, market participants will closely monitor developments in both economic data releases and geopolitical tensions, as they continue to shape the trajectory of oil prices in the near term.