Oil prices rose by more than 1% as China signaled a shift towards a "moderately loose" monetary policy for the first time since 2010, aiming to boost economic growth.
Analysts suggest that China's easing stance, driven by its faltering property market and sluggish consumption, has bolstered market sentiment.
OPEC+ recently delayed plans for increased output until April due to weak demand from China. Saudi Aramco also lowered its January 2025 crude prices for Asia to their lowest since 2021, reflecting concerns about oversupply amid stagnant Chinese demand.
The fall of Syrian President Bashar al-Assad has added a new layer of geopolitical tension, heightening fears of instability in the Middle East. With power vacuums historically leading to turmoil, such as in Libya and Iraq, investors are closely monitoring potential regional spillovers. However, market strategists believe the risk of broader oil supply disruptions remains limited.
Overall, geopolitical tensions are counterbalanced by looming market oversupply in 2025, with OPEC+ production constraints unlikely to significantly tighten balances. Additionally, investors are eyeing this week’s U.S. inflation data, which could offer insights into the Fed’s interest rate trajectory.
Despite bullish support from Middle East uncertainties and China’s stimulus measures, the broader oil market faces challenges from weak demand fundamentals and surplus projections, keeping prices within a narrow range.