Oil prices held steady on Tuesday, remaining close to three-week highs amid increased tensions in the Middle East and a recovery in demand from China.
Brent futures dipped 11 cents to $83.45 a barrel, while U.S. West Texas Intermediate (WTI) crude for April delivery edged down 11 cents to $78.35 a barrel. The March WTI contract rose 36 cents to $79.55 a barrel as traders prepared for the contract to expire during the day.
Geopolitical tensions in the Middle East, specifically the Iran-aligned Houthis’ attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, contributed to the upward pressure on oil prices. The attacks on vessels increased since Friday, with at least four more ships hit by drone and missile strikes.
Additionally, signs of stronger demand in China provided support to oil prices. Tourism revenues in China surged 47.3% year-on-year, surpassing pre-COVID levels during the national Lunar New Year holiday that ended on Saturday. China also cut a benchmark reference rate for mortgages more than expected on Tuesday to boost its property market and economy.
However, concerns about global oil demand persisted, partially fueled by a bearish report from the International Energy Agency (IEA) last week. The IEA revised its 2024 oil demand growth forecast downward, anticipating a shift toward renewable energy that would replace fossil fuel usage.