Oil rises as hopes for Middle East escalation fade

Oil prices continued to rise for a second day in a row during Tuesday’s trading, as traders’ hopes for a ceasefire faded amid geopolitical tensions in the Middle East, and focus on balancing global supply and demand for crude.

Brent crude futures rose $1.75, or 2.36%, to settle at $76.04 a barrel.

US crude futures rose $1.53, or 2.17%, to settle at $72.09 a barrel, according to Reuters.

But oil market traders believe that these efforts will not be significantly different from previous visits made by the US Secretary of State to the Middle East since the outbreak of the Gaza war on October 7, 2023, according to Bob Yawger, director of energy futures at Mizuho.

Alex Hodes, an energy analyst at oil brokerage StoneX, said traders were assessing the impact of China’s stimulus measures on fuel demand, as well as the balance between supply and demand.

Brent and US crude futures rose about 2% at settlement on Monday, recovering some of the more than 7% decline they experienced last week after the People’s Bank of China cut interest rates as part of measures to revive the slowing economy.

The head of the International Energy Agency said on Monday that he expected China’s oil demand growth to remain weak through 2025, as Beijing works to shift to electric cars.

But the head of Saudi Aramco said on Monday that his company was “very optimistic” about Chinese oil demand, especially after the government’s recent stimulus package aimed at boosting growth. U.S. crude oil inventories likely rose by about 100,000 barrels last week, with gasoline and distillate stocks falling by more than 1.5 million barrels each, a Reuters poll showed. Crude inventories fell by 2.2 million barrels in the week to Oct. 11.