NEWS

Oil prices jumped about 2% on Tuesday after news of fiscal stimulus measures in China, the world's largest crude importer, concerns that conflict in the Middle East could disrupt supplies from the region and a new hurricane that threatens supplies in the United States.

Brent crude futures rose $1.27, or 1.72%, to settle at $75.17 a barrel.

WTI crude futures rose $1.19, or 1.69%, to settle at $71.56 a barrel.

"The Chinese government's announcement of the largest stimulus package since the COVID-19 pandemic, coupled with a sudden escalation in geopolitical tensions in the Middle East ... dealt a blow to the negative sentiment that has dominated oil markets over the past three weeks," Claudio Galimberti, director of global market analysis at Rystad Energy, said in a note.

China’s central bank on Tuesday announced its biggest stimulus measures since the Covid-19 pandemic to pull the economy out of recession and back toward the government’s growth target, but analysts warned that more fiscal support was needed to achieve those goals.

In the Middle East, a key oil-producing region, an Israeli airstrike on a southern suburb of Beirut killed a Hezbollah military commander, raising fears of a full-scale war in the region.

The strikes threaten to push Iran, an OPEC member and Hezbollah ally, into a confrontation with Israel.

“The Israeli chief of staff has said that attacks on Hezbollah will intensify,” said Alex Hodes, an oil analyst at brokerage StoneX. “This has raised new concerns about the possibility of a full-scale war in the Middle East, which could destabilize the entire region.”

US National Security Adviser Jake Sullivan said President Joe Biden was determined to reach a ceasefire in Gaza and release hostages with the Palestinian Islamic Resistance Movement (Hamas) while also seeking to calm tensions on Israel’s border with Lebanon.

Meanwhile, US oil companies rushed to evacuate their employees from oil production platforms in the Gulf of Mexico amid expectations that the second hurricane in two weeks would hit offshore oil fields.

Several oil companies have suspended some of their production, although the path of Tropical Storm Helene indicates that it will not hit most of the western and central Gulf of Mexico’s production areas and will reach the Florida Panhandle as a hurricane late on Thursday.

The American Petroleum Institute is due to release its weekly estimates of US oil inventories later on Tuesday, and the US Energy Information Administration is due to release its inventory data on Wednesday.