HG MARKETS:

Oil prices inched higher on Monday, buoyed by optimistic manufacturing data from China, the world’s largest crude importer, which bolstered expectations for stronger fuel demand. However, concerns over global economic growth, driven by potential U.S. tariffs and uncertainty surrounding a Ukraine peace deal, tempered gains. Brent crude rose by 19 cents, or 0.3%, to $73.00 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 19 cents, or 0.3%, to $69.95 per barrel.

The upward movement in prices followed official data released on Saturday, indicating that China’s manufacturing activity expanded at its fastest pace in three months in February. The increase was driven by a rise in new orders and higher purchasing volumes, leading to stronger production output. Investors are now closely monitoring China’s annual parliamentary meeting, set to begin on March 5, for potential policy measures aimed at revitalizing the country’s economy.

In February, both Brent and WTI recorded their first monthly declines in three months, as investor confidence in global economic growth waned amid heightened concerns over trade tensions and tariff threats from the U.S. and its key partners. This cautious sentiment led to reduced risk appetite across markets. Investor outlook improved following a summit on Sunday where European leaders reaffirmed their strong support for Ukrainian President Volodymyr Zelenskiy, pledging additional assistance to Ukraine. This came just days after a tense encounter between Zelenskiy and U.S. President Donald Trump, which resulted in the Ukrainian leader cutting short his visit to Washington.

Despite the diplomatic friction, Zelenskiy expressed optimism about repairing relations with Trump. He emphasized that further discussions should take place privately and reiterated his willingness to sign a minerals agreement with the United States; expressing confidence that Washington remains open to the deal. Analysts at RBC Capital, including Helima Croft, noted that the diplomatic tensions have heightened concerns about a potential rupture in U.S.-Ukraine relations and the prospect of a separate peace agreement between Washington and Moscow.

Meanwhile, ongoing attacks on Russian refineries continue to pose risks to its refined product exports. Reports on Monday indicated that another refinery, located in the Russian city of Ufa, had caught fire, and further exacerbating supply concerns. Looking ahead to 2025, analysts are maintaining steady oil price forecasts, with Brent expected to average $74.63 per barrel, according to a Reuters poll. The survey suggests that any potential impact from additional U.S. sanctions could be offset by ample global supply and the possibility of a peace settlement between Russia and Ukraine.

In a separate development, the United States is urging Iraq to resume crude oil exports from the semi-autonomous Kurdistan region. However, eight international oil firms operating in the region announced on Friday that they would not restart shipments through Turkey’s port of Ceyhan. The companies cited a lack of clarity on commercial agreements and concerns over payment guarantees for both past and future exports.