Oil prices started the week on a strong note after the United States launched attacks on Yemen’s Houthi group. The U.S. Department of Defense said these strikes would continue until the Houthis stop attacking ships in the Red Sea.
At the time of writing, Brent crude was trading at $71.10 per barrel, while West Texas Intermediate (WTI) stood at $67.70 per barrel. Both were higher than their opening prices, and experts believe they could rise further unless the Houthis agree to halt their attacks.
How the Conflict Affects Oil Prices
The Houthi attacks have forced shipping companies to take longer routes around Africa instead of passing through the Red Sea. This has increased transportation costs and fuel demand, pushing oil prices up.
Analysts say that if WTI crude oil moves above $68.50 per barrel, traders who had bet on lower prices might start buying again to avoid losses, which could push prices even higher.
China’s Economic Impact on Oil Demand
China, the world’s biggest oil importer, has shown mixed economic data. Industrial production slowed in the first two months of 2025, but retail sales increased. Additionally, China’s refineries processed 2.1% more crude oil than last year, partly due to high travel demand and a new refinery that started operations. This refinery added 200,000 barrels per day (bpd) to demand and is expected to add another 200,000 bpd this month.
China’s struggling property market has been a concern for oil traders, but some experts believe it is starting to stabilise. However, full recovery may take time.
What’s Next for Oil Prices?
With geopolitical tensions rising and China’s demand showing signs of growth, oil prices may continue to climb. However, if the Houthis agree to stop their attacks or if China’s economy weakens further, prices could drop again.