Oil prices surge amid US strikes and China's economic revival
Oil prices on the New York fuel exchange are rising in response to data from China and the U.S. strikes on Houthi positions, according to brokers. Analysts at Goldman Sachs Group Inc. are already reducing their oil forecasts for the Brent benchmark due to several unfavourable factors affecting commodity prices.
A barrel of West Texas Intermediate oil for April delivery costs $67.63 on NYMEX in New York, up 0.67 percent. Brent on ICE for May is priced at $71.03 a barrel, following an increase of 0.64 percent.
The world's main oil importer, China, announced over the weekend that it will take steps to revitalise domestic consumption by increasing citizen income, as reported by the Xinhua news agency.
Chinese authorities aim, among other things, to stabilise the stock market and the domestic real estate sector, alongside offering incentives to increase the birth rate among the Chinese population.
The government in Beijing is doing everything possible to support the economy and is striving to relieve the deflationary pressure besetting it.
Strike on Houthi
Meanwhile, there have been U.S. airstrikes on pro-Iranian Houthi rebel positions in Yemen.
The targets of the airstrikes included, among others, Houthi military facilities in the city of Taiz in southwestern Yemen.
The U.S. Air Force also attacked Yemeni rebel facilities in the provinces of Saada, Damar, and Al-Bayda. In Sanaa, the headquarters of the Houthi Supreme Political Council, weapons depots, and command centres were shelled.
Decisive operation
On Saturday evening, U.S. President Donald Trump announced that the military had launched a "decisive and powerful" military operation against the Iranian-backed Houthi rebels in Yemen.
Since autumn 2023, the Houthis have carried out over 100 attacks on merchant ships in the Red Sea and the Gulf of Aden, claiming they are expressions of solidarity with Hamas in its fight against Israel.
However, analysts point out that despite geopolitical tensions, the price of oil has fallen from the peak recorded in January this year by more than $10 a barrel, as the U.S. trade war's escalation with its trading partners negatively affects commodity prices.
Furthermore, OPEC+ intends to increase oil supplies from April, and the war in Ukraine may soon be resolved, or at least military actions might be suspended.
Unfavourable factors
Analysts, including those from Goldman Sachs Group Inc., are already lowering their oil forecasts for the Brent benchmark due to several unfavourable factors affecting commodity prices.
Goldman Sachs assesses that oil demand growth will be lower than previous estimates, as U.S. tariffs endanger global economic growth.
Goldman Sachs has cut its Brent forecast by $5 to $71 a barrel.
Goldman Sachs wrote in a market note that the medium-term risk to our forecast remains on the downside, considering a potential further escalation of U.S. tariffs and possible prolonged maintenance of increased oil production by OPEC+.
However, in the short term, oil prices may slightly rebound as U.S. economic growth remains resilient to adverse factors, and Western sanctions against Russia show no signs of easing.
