Oil prices rise due to supply expectations and political concerns

Oil prices rise due to the escalation in Gaza and Ukraine (Shutterstock)

Oil prices rose on Monday, consolidating their gains from last week when prices rose by about 4% amid expectations of lower supplies.

Rising prices

Brent crude futures for the nearest delivery rose 0.86% to $86.09 per barrel, and US West Texas Intermediate crude rose 0.93% to $81.79 per barrel, at the time of writing the report.

This comes in light of the rise in industrial production in China by 7% in the first two months of the year, according to data issued by the National Bureau of Statistics, which exceeds expectations for a 5% increase in a Reuters poll of analysts’ opinions and faster than the 6.8% growth expected last December. It also represents the fastest growth in almost two years.

Monday's data joins recent better-than-expected export and consumer inflation indicators, providing an early boost to Beijing's hopes of reaching what analysts described as an ambitious 5% GDP growth target for this year.

Oil prices rose on the back of Chinese industrial output growth and tensions in Gaza and Ukraine (Shutterstock)

Geopolitical tensions

In the context of geopolitical tensions, “Geopolitical concerns also remain high,” analysts from ANZ wrote in a note, referring to an intensified Ukrainian drone campaign on Russian oil refineries over the weekend.

Yesterday, Sunday, one of the attacks caused a fire at the Slavyansk refinery in Krasnodar, which processes 8.5 million metric tons of crude oil annually, or 170,000 barrels per day.

In the Middle East, Israeli Prime Minister Benjamin Netanyahu confirmed on Sunday that he would go ahead with plans to invade Rafah in the southern Gaza Strip, where it shelters more than a million displaced people, in defiance of pressure from Israel's allies.

German Chancellor Olaf Scholz said that this step would make peace in the region “extremely difficult.”

Source: Reuters