Oil prices increase amid improved demand outlook, Middle East events
(MENAFN) Early Asian trading on Tuesday witnessed a surge in oil prices, buoyed by signals of strengthening demand and escalating tensions in the Middle East. The surge follows the previous session's rally in US futures to their highest level in five months. Tony Sycamore, a market analyst at IG, highlighted that the rally was fueled by stronger-than-expected manufacturing data from both the US and China, two major consumers of oil globally.
March saw an expansion in manufacturing activity in China for the first time in six months, coupled with a similar trend in the United States, marking the first expansion in a year and a half. These developments were interpreted by the markets as indicative of robust oil demand, given China's status as the world's largest importer of crude oil and the United States' position as the largest consumer.
However, amidst the backdrop of improving demand, tensions in the Middle East have intensified, further influencing oil prices. An Israeli strike on the Iranian embassy in Syria resulted in the death of seven military advisers, including three senior commanders, marking a significant escalation in the ongoing conflict in the region. This incident has raised concerns about potential disruptions to oil supplies, although the market currently appears to perceive the conflict as contained.
ANZ analysts noted in a statement that while the market currently shows little concern about supply disruptions, there is a potential threat to Iran's oil supplies should the conflict escalate further due to its involvement. This geopolitical uncertainty adds a layer of volatility to oil markets, as investors closely monitor developments in the Middle East.
Against this backdrop, the Organization of the Petroleum Exporting Countries (OPEC) is set to convene an online meeting of its Joint Ministerial Monitoring Committee on Wednesday. The meeting aims to review market conditions and member compliance with production cuts, further shaping market sentiment and influencing oil prices in the coming days.
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