Oil prices edged higher on Monday as the United States escalated its military campaign against Yemen’s Iran-aligned Houthi group, vowing continued strikes until the militia ceases its attacks on global shipping routes. Investors are closely monitoring the situation, as geopolitical tensions in the Middle East add to an already complex economic landscape of trade disputes and shifting demand forecasts.
Brent crude futures rose by 0.8% to $71.14 per barrel, while West Texas Intermediate (WTI) crude also gained 0.8%, reaching $67.74 per barrel. The upward movement comes as US airstrikes, the largest since President Donald Trump took office, intensify in response to Houthi assaults that have disrupted global commerce. A US official signalled that the military campaign could persist for weeks, further stoking concerns over supply disruptions.
Oil prices managed to recover last week after a three-week downturn driven by fears of a global economic slowdown. However, China’s latest economic data painted a mixed picture, tempering some of the market’s early gains. While retail sales saw a modest uptick, industrial output growth slowed in the first two months of the year. In response, Beijing unveiled a “special action plan” aimed at stimulating domestic consumption and reinforcing economic recovery amid ongoing US trade pressures.
The interplay between US tariffs and Chinese stimulus measures is shaping market sentiment. Analysts suggest that China’s efforts to bolster growth could provide support for oil prices, counterbalancing concerns over US protectionist policies. Bjarne Schieldrop, chief commodities analyst at SEB Research, noted that Chinese stimulus signals might help Brent crude break out of its recent trading range.
Goldman Sachs, however, struck a cautious note, lowering its oil price forecasts. The bank now projects Brent crude to reach $71 per barrel by December 2025, down $5 from previous estimates, with WTI expected at $67 per barrel. It also adjusted its long-term Brent price range to $65–$80 per barrel, forecasting an average of $68 per barrel in 2026. The revisions reflect expectations of weaker US economic growth and a slower-than-anticipated increase in oil demand. Additionally, supply from OPEC+ is expected to exceed earlier forecasts, further weighing on price expectations.
Amid these competing forces, oil markets remain in flux, balancing geopolitical risks with shifting economic trends. Investors will be watching closely as global trade dynamics, military actions, and policy responses continue to shape the future of energy markets.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
