Oil Prices Head Higher as Economic Optimism Grows.
Originally uploaded on January 26, 2024
Solid economic growth figures from the U.S, news about China's economic stimulus and ongoing tensions in the Middle East all combined this week to push oil prices higher.
U.S. GDP in the fourth quarter of last year expanded by 3.3%, which was substantially higher than what analysts had expected, which was 2% growth.
Meanwhile, in China, the central bank said it would inject the equivalent of $140 billion into the economy to stimulate faster growth by cutting the amount of reserves local banks need to hold.
In the Middle East tensions continue running high, with the Yemeni Houthis striking a U.S.-owned cargo vessel this week following the second round of attacks on targets in Yemen by U.S. and UK forces.
Earlier this week reports emerged that Washington had asked Beijing to talk to Tehran and get the Iranians to convince the Houthis to stop attacking ships in the Red Sea. These reports were followed by news, based on unnamed sources, that Chinese officials had approached Iran’s leadership with a request to tell the Houthis to dial down the anti-ship violence.
"Basically, China says: 'If our interests are harmed in any way, it will impact our business with Tehran. So tell the Houthis to show restraint'" one source from the Iranian government told Reuters.
Chinese vessels are not targets for the Houthis but the disruption of traffic in the Red Sea has hurt Chinese exporters by significantly lengthening the time needed for their goods to reach their end destination in Europe, adding to costs.
Oil traders appear to have finally started noticing these developments and have factored the disruption into their trading decisions. On Thursday, Brent crude topped $80, jumping above $82 before retreating Prices fell back slightly in early trading this morning but remained elevated for the week.
Therefore, as we head into the final few days of January fuel cards customers can expect a price rise in the region of 1.1 pence per litre next week.