Oil prices climbed about 2% on Tuesday, reaching a three-week high as China’s announcement of its largest monetary stimulus since the pandemic and growing conflict in the Middle East fueled concerns over oil supply disruptions. Brent crude rose $1.27, or 1.7%, to settle at $75.17 a barrel, the highest close since September 2, while U.S. West Texas Intermediate (WTI) increased $1.19, or 1.7%, to close at $71.56. Claudio Galimberti, global market analysis director at Rystad Energy, stated, “The Chinese government’s announcement of its largest stimulus package since the pandemic, combined with the sudden rise of geopolitical tension in the Middle East … has dealt a blow to the bearish sentiment that dominated the oil markets in the past three weeks.” China’s central bank is taking aggressive steps to combat deflation and support economic growth, though analysts warn additional fiscal measures are necessary to meet targets.
Tensions in the Middle East, a key oil-producing region, also contributed to price increases, as an Israeli airstrike on Beirut killed a senior Hezbollah commander, heightening fears of a broader conflict involving Iran. OPEC raised its long-term global oil demand forecast, pointing to growth in India, Africa, and the Middle East, as well as a slower transition to cleaner energy sources. Meanwhile, U.S. oil production faced limited disruptions from an approaching hurricane, with companies like Shell beginning to restore production as the storm’s path shifted away from key offshore platforms. Analysts expect U.S. crude inventories to have fallen by 1.2 million barrels for the week ending September 20, marking the fifth decline in six weeks. This decrease is smaller than last year’s 2.2 million barrel draw for the same period.