Oil prices are climbing again, but will the rally hold? Key factors to watch include China’s economic stimulus, escalating Red Sea tensions, and U.S. tariffs—all of which could shake up the crude market.
Oil prices are rising again, driven by at least two key factors.
China, the world’s largest oil importer, has announced plans to implement measures aimed at stimulating consumption through income growth. Meanwhile, the United States has launched new strikes against the Houthis in Yemen.
Brent crude surpassed $71 per barrel after gaining 1% on Friday, while WTI approached $68. According to state-run Xinhua News Agency, Beijing will soon provide details on policies designed to stabilize stock and real estate markets, boost wages, and support demographic growth.
At the same time, U.S. military strikes against Yemen’s Houthi militants will remain “relentless” until the group ceases its attacks on civilian and military vessels in the Red Sea, U.S. Secretary of Defense Pete Hegseth stated on Sunday.
Both of these developments could have a significant impact on the oil market, supporting price growth, which has remained subdued so far. Last week, oil prices edged higher, breaking a three-week losing streak driven by concerns over a global economic slowdown amid escalating trade tensions between the United States and other major economies.
China and Red Sea Developments Drive Oil Prices Higher
On Monday, March 17, oil prices climbed after the United States reiterated its commitment to sustained military action against Yemen’s Houthis until the Iran-backed group halts its attacks on commercial shipping.
The U.S. airstrikes, which reportedly resulted in 53 casualties, mark the most extensive American military operation in the Middle East since President Donald Trump took office in January. A U.S. official told Reuters that the campaign could last for weeks.
The ongoing Houthi attacks on vessels in the Red Sea have disrupted global trade flows and forced the U.S. military into an expensive and complex missile and drone interception campaign. Additionally, Iran’s involvement in the conflict could have significant repercussions on crude oil markets. The U.S. has signaled harsher sanctions against Tehran, a move that would further restrict Iranian oil exports.
Meanwhile, China’s economic outlook is gaining momentum. On Sunday, the State Council (China’s cabinet) unveiled a “special action plan” designed to stimulate domestic consumption and revitalize the country’s economy. A recovery in China—currently grappling with a deflationary demand crisis—would likely boost oil consumption and, in turn, put upward pressure on prices.
Oil Price Outlook: Watch for U.S. Recession Risks
Goldman Sachs analysts have lowered their oil price forecasts, citing weaker-than-expected U.S. economic growth due to tariffs imposed on key trading partners, including Canada, China, and Mexico.
“We are revising our December 2025 Brent forecast downward to $71 per barrel (WTI to $67), adjusting our Brent price range to $65-$80, and lowering our 2026 mid-year projection to $68 per barrel for Brent (WTI to $64), a reduction of $5,” Goldman analysts stated in a research note.
According to Goldman Sachs, oil demand is expected to grow at a slower pace than previously anticipated, while OPEC supply may surpass expectations.
In March, U.S. consumer confidence fell to its lowest level in two and a half years, while inflation expectations surged amid concerns that Trump’s tariffs could drive up costs and weaken economic growth. A slowdown in U.S. consumption could exert downward pressure on oil prices by reducing demand.
Additionally, the International Energy Agency (IEA) tempered optimism among oil bulls, reporting that crude supply is currently outpacing demand by 600,000 barrels per day. The agency also revised its demand forecast lower for the year. The IEA is not alone in its bearish outlook—some of the world’s largest oil traders are also turning cautious as global oversupply concerns mount, both within and outside of OPEC.
Original article published on Money.it Italy 2025-03-17 09:19:22. Original title: Cosa succede al prezzo del petrolio? Attenzione a Cina, Mar Rosso, dazi USA
