By Scott DiSavino
NEW YORK (Reuters) -Oil prices held near a two-week high on Tuesday as instability in the Middle East increased the risk of supply disruptions, while China’s plans for more economic stimulus could boost fuel demand in the world’s second biggest economy.
Those price gains were held in check as the market waited for news from talks between U.S. President Donald Trump and Russian President Vladimir Putin over a possible ceasefire in Ukraine, which could ease sanctions on Russian fuel exports.
Brent futures rose 25 cents, or 0.4%, to $71.32 a barrel by 10:43 a.m. EDT (14:43 GMT), while U.S. West Texas Intermediate (WTI) crude rose 17 cents, or 0.3%, to $67.75.
That put both crude benchmarks up for a third day with Brent on track for its highest close since March 3 and WTI on course for its highest close since March 4.
Oil prices have gained support from Trump’s vow to continue the U.S. assault on Yemen’s Houthis unless they end their attacks on ships in the Red Sea.
Trump said he would hold Iran responsible for any attacks carried out by the Houthi group that it backs in Yemen. If the U.S. acts against Iran, or the Houthis act against other Arab producers, global oil supplies could decline.
“Increasing Mideast instability following U.S. attacks on the Houthis that threaten to disrupt Iranian supplies has added a supportive element,” analysts at energy advisory firm Ritterbusch and Associates said in a note.
Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), produced about 3.3 million barrels per day (bpd) of crude in 2024, according to the U.S. Energy Information Administration (EIA).
Elsewhere in the Middle East, Israeli air strikes in Gaza killed over 400 people, Palestinian health authorities said, as attacks ended a weeks-long standoff over extending a ceasefire that halted fighting in January.
In Nigeria, an OPEC member, a blast struck the Trans Niger oil pipeline, its owner confirmed on Tuesday. The pipeline can transport around 450,000 bpd from onshore fields to the Bonny export terminal.
In China, meanwhile, retail sales growth quickened in January-February in a welcome sign for policymakers’ efforts to boost domestic consumption even as joblessness rose and factory output eased, underscoring the strains on an economy facing fresh U.S. tariffs.
ECONOMIC WORRIES
In the U.S., the world’s biggest economy, retail sales rebounded marginally in February as consumers pulled back on discretionary spending, reinforcing the growing uncertainty over the economy against the backdrop of tariffs and mass firings of federal government workers.
The Organisation for Economic Co-operation and Development (OECD) warned that U.S. tariffs would reduce economic growth in the U.S., Canada and Mexico, and weigh on global energy demand.
Analysts at energy data and analytics firm Wood Mackenzie projected Brent crude oil prices would average $73 per barrel in 2025, down $7 per barrel from 2024 due to U.S. tariff policies and OPEC+ plans to boost output.
Earlier this month, OPEC+, which includes OPEC and allies like Russia and Kazakhstan, decided to proceed with a planned oil output increase in April.
In Kazakhstan, the energy minister will stand down from his role as the government struggles to convince U.S. and European oil companies to lower production that exceeds OPEC+ targets.
Kazakhstan produced about 1.5 million bpd of crude in 2024, according to U.S. EIA data.
In Europe, Ukraine has already agreed to a U.S.-proposed 30-day ceasefire with Russia, which invaded Ukraine in February 2022.
Markets believe a possible Russia-Ukraine peace would involve the easing of sanctions on Russia and the return of its crude supply to global markets.
Russia produced 9.2 million bpd of crude in 2024, according to U.S. EIA data.
U.S. OIL INVENTORIES
U.S. oil inventory data from the American Petroleum Institute (API) trade group is due on Tuesday and U.S. Energy Information Administration data is due on Wednesday. [EIA/S] [API/S]
Analysts forecast energy firms added about 0.9 million barrels of oil to U.S. stockpiles during the week ended March 14.
That compares with a decrease of 2.0 million barrels during the same week last year and an average build of 1.6 million barrels over the past five years (2020-2024).
(Reporting by Scott DiSavino in New York, Paul Carsten in London, Colleen Howe in Beijing and Emily Chow in Singapore; Editing by Jacqueline Wong, Clarence Fernandez, Kim Coghill and Ed Osmond)
