Brent oil futures surged past $71 on Monday, driven by escalating geopolitical tensions following the United States’ military strikes on Yemen’s Houthi rebels over the weekend.
Market analysts suggest that concerns over Middle East stability, coupled with positive economic data from China, have contributed to the rise in oil prices.
Tony Sycamore, an analyst at IG, highlighted the role of geopolitical tensions in market movements.
“We’ve got a reemergence of those geopolitical tensions.
“If crude oil gets much above $68.50, I think that could really start to trigger some short covering in the market.”
Tony Sycamore, an analyst at IG
Brent crude futures climbed by 76 cents (1.1%) to $71.34 per barrel by 13:15 GMT, while U.S. West Texas Intermediate (WTI) crude rose 65 cents (1%) to trade at $67.83 per barrel.
Analysts attribute this increase to renewed fears of supply disruptions in the Middle East following the U.S. military intervention.
The surge in oil prices follows back-to-back U.S. airstrikes on Yemen, targeting Houthi rebel leaders.
The airstrikes, which began over the weekend, were carried out in response to Houthi attacks on U.S. ships and other commercial vessels in the Red Sea.
According to Al Jazeera, the strikes have resulted in 53 deaths, including children, and left over 100 people injured.
The airstrikes, ordered by U.S. President Donald Trump, have raised concerns about further instability in the Middle East, which remains a key region for global oil production and supply routes.
Market analysts believe the escalation in Yemen could have ripple effects across the global energy market.
“Any conflict in the Middle East tends to put pressure on oil prices due to the potential for supply chain disruptions.”
Tamas Varga, an oil analyst at brokerage PVM
China’s Economic Data Supports Oil Market Recovery
Beyond geopolitical factors, positive economic data from China also played a role in boosting crude oil prices. China, the world’s largest crude oil importer, reported strong retail sales growth in the January-February period, which provided a glimmer of hope for global demand.
“Oil prices are benefiting from better-than-expected Chinese economic data, more potential stimulus measures in China, and renewed tensions in the Middle East, although so far there are still no supply disruptions.”
Giovanni Staunovo, an analyst at UBS
However, concerns persist about China’s factory output slowdown and rising unemployment rates, which could weigh on future demand for crude oil.
Despite the price increase, analysts note that oil prices remain under pressure, largely due to ongoing economic concerns and anticipated production increases from major oil-producing nations.
One key factor supporting oil prices is the backwardation structure in the market—where near-term oil contracts are trading at a premium to later deliveries. This structure is often viewed as a sign of strong physical demand.
“The market’s strong fundamentals remain intact, with supply-demand balances showing resilience.
“However, uncertainty over economic growth and global trade tensions continues to be a challenge.”
Tamas Varga, an oil analyst at brokerage PVM
Although oil prices rose on Monday, they are still down nearly 5% this year, as worries over a global economic slowdown and U.S.-China trade tensions weigh on the market.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to increase output from April, a move that could further suppress oil prices.
However, analysts believe tighter U.S. sanctions on Iran could counterbalance the impact of higher OPEC+ production.
While oil prices have seen an immediate boost due to geopolitical tensions and economic data, the broader market remains volatile.
The interplay between Middle East conflicts, China’s economic policies, OPEC+ production adjustments, and geopolitical negotiations will continue to shape crude oil prices in the coming weeks.
Market participants remain cautious, closely monitoring further U.S. military actions in Yemen, Chinese economic performance, and OPEC+ decisions on output levels.
As geopolitical risks and economic factors drive short-term price fluctuations, industry experts urge investors to brace for continued uncertainty in global oil markets.
READ ALSO: Prof. Prempeh Calls For Governance Reset
