Oil Prices Rise Amid US Strikes on Houthis and China's Economic Data Boost

Oil prices edged higher on Monday following U.S. military strikes against Yemen's Houthi rebels and positive economic data from China that raised hopes for stronger demand.

The U.S. launched airstrikes on the Houthis on Saturday in retaliation for their attacks on Red Sea shipping routes. President Donald Trump stated that the strikes would continue until the attacks on shipping cease, with some officials indicating the campaign could last for weeks.

At 11:25 AM ET (15:25 GMT), Brent crude futures rose by 28 cents, or 0.4%, to $70.85 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 22 cents, or 0.3%, to $67.39.

Simultaneously, Chinese economic data supported oil prices. Retail sales in China showed growth in January and February, signaling stronger domestic consumption, though factory output eased and unemployment rose. Additionally, China's crude oil throughput rose 2.1% year-on-year in the first two months of the year, aided by a new refinery and increased holiday travel. Despite weak refining margins, the data pointed to sustained demand for crude.

Phil Flynn, senior analyst at Price Futures Group, noted that the combination of increased Chinese stimulus and the ongoing Houthi threat was providing a boost to oil prices.

Although oil prices rose slightly last week, Brent crude remains nearly 5% lower this year, driven by concerns over a global economic slowdown and ongoing trade tensions. OPEC+'s plan to increase output starting in April has also weighed on prices. However, tighter U.S. sanctions on Iran could offset the OPEC+ production increase, according to Saxo Bank's Ole Hansen.

"The combination of China's consumption plans and the risks in the Red Sea are supporting the market," Hansen added.

In global geopolitics, President Trump is expected to speak with Russian President Vladimir Putin on Tuesday about a potential resolution to the Ukraine war. The discussions may include territorial concessions from Kyiv and control over the Zaporizhzhia nuclear power plant, which could have significant implications for global oil markets. However, a potential peace deal could lead to increased Russian crude supply to the market, potentially pressuring oil prices.