Oil prices rose on Monday following the release of positive manufacturing data from China, the world’s biggest crude importer, which led to renewed optimism regarding fuel demand. However, uncertainty grew surrounding the Ukraine-Russia peace deal and the impact of potential U.S. tariffs on global economic growth.
As of 6:47 GMT, Brent crude climbed 0.25 percent to $72.99 per barrel while U.S. West Texas Intermediate crude gained 0.23 percent to $69.92 a barrel.
China manufacturing activity expands
Oil prices rose on Monday after official data showed that China’s manufacturing activity expanded at the fastest pace in three months in February as new orders and higher purchase volumes led to a notable rise in production. Investors are now looking forward to China’s annual parliamentary meeting which starts on March 5 for further insights into potential measures to support its economy.
Despite the recent recovery in manufacturing activity, analysts cautioned that the country’s economic outlook remains uncertain, particularly with another round of tariffs on exports to the U.S. set to start on March 4.
Other analysts were more positive about the data, saying that it suggests stable economic activity in China in early 2025, although the imposition of the additional 10 percent U.S. tariff may prompt retaliatory measures.
Hopes for easing sanctions dwindle
Last month, oil prices posted their first monthly decline in three months as the threat of tariffs from the U.S. and its trade partners impacted investor confidence in global economic growth this year and increased demand for safe-haven assets.
However, market sentiment improved on Sunday after European leaders converged at a summit in London and strongly supported Ukrainian President Volodymyr Zelenskiy and promised to do more to help his nation. This came only two days after U.S. President Donald Trump clashed with him, and Zelenskiy cut his visit to Washington short.
On Sunday, Zelenskiy said that his relationship with Trump is salvageable but talks needed to continue behind closed doors. He added that he was still ready to sign a minerals deal with the U.S. and that he believed the U.S. would be ready as well.
Following the two presidents’ meeting, a Ukraine-Russia peace deal seemed unlikely in the near future which impacted hopes for an easing of sanctions. Furthermore, ongoing attacks on Russian refineries have raised concerns about its crude exports, with another plant in the Russian city of Ufa reportedly on fire.
Read: UAE gold prices rise AED0.5, global rates gain on Ukraine peace deal uncertainty
Brent to average $74.63 in 2025
Despite recent developments, analysts are holding their oil price forecasts for 2025 largely steady. Brent is expected to average at $74.63 a barrel, as traders expect any impact from further U.S. sanctions to be balanced by strong supply and a possible peace deal between Russia and Ukraine, a Reuters poll showed.
Turkish Energy Minister Alparslan Bayraktar said on Sunday that Turkey wants the Iraq-Turkey Oil pipeline to run at full capacity once operations resume through Ceyhan. However, eight international oil companies operating in Iraq’s Kurdistan region stated on Friday that they would not restart oil exports through Ceyhan, despite Baghdad’s announcement that the resumption was imminent.
