Oil Prices Rise on Heightened Red Sea Tensions
Oil prices rose slightly in the global commodity market on Monday as red sea tension heightened. Brent crude, increased by around 0.67% trading at $70.71 per barrel, up from $70.24 at the previous session’s close.
The US benchmark, West Texas Intermediate (WTI), rose by 0.73%, settling at $67.40 per barrel, compared to its prior session close of $66.91. The US launched airstrikes on multiple Yemeni cities late on Saturday, killing at least 31 people, as US President Donald Trump ordered the ‘strong and decisive’ strikes against Houthi targets, warning that ‘hell will rain down’ if the group continues attacks on Red Sea shipping.
On Sunday, the Houthi group announced that it had targeted a US aircraft carrier with ballistic missiles and drones in retaliation for the American aggression against Yemen. The Houthis have been attacking Israeli-linked ships in the Red Sea with missiles and drones since late 2023, disrupting global trade, in solidarity with the Gaza Strip.
The group halted its attacks when a ceasefire was declared in January between Israel and Hamas, but threatened to resume the attacks when Israel blocked all aid into Gaza on March 2. The ongoing hostilities pose a risk to maritime trade security in the Red Sea, potentially tightening oil supplies.
Also, China, the world’s largest crude oil importer, introduced a comprehensive plan to boost domestic consumption on Sunday, supporting economic recovery amid intensified US trade tariffs. The country’s latest plan highlights a strategic shift toward internal demand as the primary growth driver, fuelling expectations of higher energy consumption and contributing to a rise in oil prices.
Pressure on oil eased last week due to a lower-than-expected increase in US crude oil inventories supported the market, while better-than-expected US consumer price inflation data also helped sentiment. Energy Information Administration (EIA) data shows that US commercial crude oil inventories increased by 1.45 million barrels over the last week.
That’s less than the roughly 2 million barrel build the market was expecting – and below the 4.2 million barrel increase the American Petroleum Institute (API) reported the previous day, ING said in a note. Refiners increased operating rates over the week, with crude oil inputs increasing by 321,000 b/d. Yet despite stronger refinery activity, refined product stocks declined.
Gasoline inventories fell by 5.74 million barrels, while distillate stocks decreased by 1.56 million barrels. Implied demand for oil products grew by 1.06 million b/d week on week, with implied gasoline demand up 305,000 b/d. Overall, the data was constructive, especially the large drop in gasoline stocks.
OPEC’s latest monthly oil market report, released, left both demand and supply estimates unchanged for 2025 and 2026. OPEC continues to forecast that 2025 oil demand will grow by 1.45 million b/d year on year, while demand grows at 1.43 million b/d next year.
The oil group remains fairly bullish on demand, with their numbers above both the EIA and the International Energy Agency (IEA). Meanwhile, OPEC production grew by 154,000 b/d month on month to 26.8 million b/d in February. Nigeria and Iran were the key drivers behind this supply growth.
Looking at broader OPEC+, supply grew by 363,000 b/d. Kazakh output surged by 198,000 b/d to 1.77 million b/d, well above its production target of 1.47 million b/d. Kazakhstan has said it will cut output in the future to compensate for this overproduction.
In natural gas, investment funds continued to cut their net long in the Title Transfer Facility (TTF) over the last week, selling 48.1TWh, leaving them with a net long of 126.7TWh.
That’s the smallest net long held since May 2024. The move over the last week was driven by fresh shorts entering the market, rather than longs liquidating. #Oil Prices Rise on Heightened Red Sea Tensions Conoil Declines by 10% on One-off Sell Order
