Oil Prices Rebound After Saudi Arabia Raises March Prices
Oil prices witnessed a slight uptick in early Asian trading on Thursday, recovering from the sell-off triggered by Saudi Arabia's announcement of a significant increase in March oil prices.
Brent crude futures rose by 0.19% to $74.75 per barrel, while U.S. West Texas Intermediate crude gained 0.25% to $71.21 per barrel.
Saudi Aramco, the world's largest oil exporter, announced on Wednesday that it would increase prices for Asia-bound shipments in March due to rising demand from China and India. The increase also targeted other regions, indicating that "new sanctions against Russia are starting to have an impact," observed market analyst Tony Sycamore of IG.
The U.S. imposed new sanctions on Russia's oil trade last month, targeting vessels used to evade blockades. Sycamore noted that after the recent sell-off and Saudi Arabia's announcement, traders may engage in "buying from traders covering shorts ahead of a strong band of support in the $70/68 region."
Oil prices had declined over 2% on Wednesday following reports of increased U.S. crude and gasoline stockpiles, as well as concerns over the impact of new U.S.-China trade tariffs. Analysts from BMI suggested that while tariffs could initially exert upward pressure on oil prices, the net effect is likely to be negative due to potential adverse effects on the global economy and Trump's tendency to offer exemptions for energy products.
So far, the 10% tariffs imposed by the U.S. on Chinese goods have fallen short of President Trump's initial threats. China's retaliatory measures were also considered limited in scope. Beijing announced tariffs on imports of U.S. oil, liquefied natural gas, and coal, but these purchases from the U.S. account for a relatively small share, mitigating the impact of the new measures.