Brent oil futures rose above $71 on Monday following the United States’ military strikes on Yemen’s Houthis over the weekend.
Al Jazeera reported that the United States has bombed Yemen for two nights in a row now, targeting Houthi leaders.
This is in response to the Houthis’ attacks on U.S. ships and other commercial vessels on the Red Sea.
About 53 people have been killed in Yemen, including children, and over 100 injured.
Reuters reported that the attacks on Yemen, ordered by President Donald Trump over the weekend influenced a surge in crude oil prices on Monday.
Brent crude futures rose by 76 cents, or 1.1%, to $71.34 a barrel by 13:15 GMT, while U.S. West Texas Intermediate (WTI) crude gained 65 cents, or 1%, to trade at $67.83.
Additionally, positive economic data from China fueled hopes of stronger demand.
In China, retail sales growth reportedly accelerated in the January-February period, offering hope for policymakers seeking to boost domestic consumption. However, factory output slowed, and unemployment rates increased.
“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,” UBS analyst Giovanni Staunovo told Reuters.
Tamas Varga of brokerage PVM pointed to the market’s strong fundamentals, citing the backwardation structure, where near-term oil contracts trade at a premium to later deliveries, as a sign of healthy physical demand.
Oil prices remain under pressure
Despite the recent uptick, oil prices remain under pressure. Brent crude is still down nearly 5% this year amid concerns over a global economic slowdown fueled by escalating U.S. trade tensions.
- Additionally, OPEC+ producers are set to increase output from April, a development that could further weigh on prices.
- However, some analysts believe tighter U.S. sanctions on Iran could offset the impact of higher OPEC+ production.
“China’s plans to boost consumption and fresh Red Sea risks are supporting the market on Monday,” said Saxo Bank’s Ole Hansen.
Another factor influencing the market is the potential for a diplomatic breakthrough in Ukraine.
President Trump announced plans to speak with Russian President Vladimir Putin on Tuesday to discuss ending the war, a development that could further impact global energy markets.
While geopolitical risks and economic data are keeping oil prices supported for now, market watchers remain cautious about broader macroeconomic uncertainties.
What this means for Nigeria
- Nigeria’s economy is dependent majorly on crude oil exports and the government hopes for oil prices to stay above $70 per barrel in 2025.
- The declining price of crude oil in the international market threatens the country’s revenues and economic fortune.
- Although, experts have said that Nigeria doesn’t necessarily need higher crude oil prices as such may have inflationary effects on the economy, the country’s revenue may take a hit if oil prices drop too much.
