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Oil Prices Rise as China Boosts Consumption and US Strikes Houthis in Yemen

Oil rose for a second day after top importer China said it would take steps to revive consumption by boosting incomes, and the US ordered fresh attacks on the Houthis in Yemen.

China’s Efforts to Revive Consumption

Brent crude climbed above US$71 a barrel after advancing 1 per cent on Friday (Mar 14), with West Texas Intermediate near US$68. Beijing will give details on policies to stabilise stock and real estate markets, lift wages and boost the nation’s birth rate, state-run news agency Xinhua reported.

Meanwhile, US military strikes on Yemen’s Houthi militants will be “unrelenting” until the group stops targeting civilian and military vessels in the Red Sea, Pentagon chief Pete Hegseth said on Sunday. That follows an order a day earlier from US President Donald Trump to attack locations controlled by the Iran-backed militia in Yemen.

OPEC+ Decision to Increase Supply and Trade War

Still, crude has fallen by more than US$10 a barrel from this year’s high in January, as Trump’s escalating trade war, an OPEC+ decision to increase supply and a possible end to the war in Ukraine all weigh on prices. The US president may speak to Russian leader Vladimir Putin this week, as Washington pushes for a deal to end the fighting in the three-year conflict.

Goldman Sachs Lowers Oil Forecasts

The dour outlook led Goldman Sachs to lower its Brent crude forecasts, analysts including Daan Struyven said in a note on Sunday. The Wall Street giant also said oil demand growth would be lower than previous estimates as tariffs endanger global growth.

“While the US$10 a barrel sell-off since mid-January is larger than the change in our base case fundamentals, we reduce by US$5 our December 2025 forecast for Brent to US$71,” the analysts said. “The medium-term risks to our forecast remain to the downside given potential further tariff escalation and potentially longer OPEC+ production increases.”

Short-term Recovery Possible

However, prices may recover “modestly” in the short term as US economic growth remains resilient, and sanctions on Russia show no immediate signs of easing, Goldman said.

Conclusion

The oil market is expected to experience a moderate recovery in the short term, driven by the US economic growth and sanctions on Russia. However, the medium-term outlook remains uncertain due to the ongoing trade war and potential OPEC+ production increases.

FAQs

Q: What is the current price of oil?
A: The current price of oil is above US$71 a barrel.

Q: What are the factors affecting oil prices?
A: Oil prices are affected by various factors, including the US-China trade war, OPEC+ decision to increase supply, and the ongoing conflict in Ukraine.

Q: How has Goldman Sachs adjusted its oil forecasts?
A: Goldman Sachs has lowered its Brent crude forecasts by US$5 to US$71, citing the potential for further tariff escalation and OPEC+ production increases.

Q: What is the outlook for the oil market in the short term?
A: The oil market is expected to experience a moderate recovery in the short term, driven by the US economic growth and sanctions on Russia.

Angela Lee
Angela Lee
Director of Research

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