Oil Prices Rise on China’s Economic Growth and Middle East Tensions
In a whirlwind of events, oil prices saw a surge on Tuesday fueled by China’s robust economic growth and escalating tensions in the Middle East. According to Reuters, the markets were on edge after Israel vowed to retaliate against Iran’s missile and drone attack over the weekend.
Brent futures for June delivery climbed 20 cents to $90.30 a barrel by 10:57 a.m. Saudi time, while US crude futures for May delivery rose 21 cents to $85.62 a barrel.
The day started with oil prices spiking nearly 1 percent following China’s release of official data showing a 5.3 percent year-on-year growth in gross domestic product for the first quarter. This surpassed analysts’ expectations, making China the world’s largest oil importer.
Despite the positive economic indicators from China, concerns over weak demand persisted as other data points such as real estate investment, retail sales, and industrial output remained lackluster due to a prolonged property crisis.
Last week, oil prices reached their highest levels since October but took a hit on Monday after Iran’s attack on Israel turned out to be less severe than anticipated. This alleviated fears of a rapidly escalating conflict that could disrupt crude oil supplies.
ANZ Research analysts highlighted the critical role of Israel’s response in determining the course of the conflict, which could potentially involve the US. Israeli Prime Minister Benjamin Netanyahu convened his war cabinet twice in less than 24 hours to strategize a response to Iran’s unprecedented direct attack.
Iran, a key member of the Organization of the Petroleum Exporting Countries (OPEC), produces over 3 million barrels of crude oil per day. The country’s involvement in the Middle East tensions adds another layer of complexity to the already volatile oil market.