Oil prices climbed on Tuesday as Israel's renewed attacks on Gaza and ceasefire breach heightened geopolitical risks, along with escalating security threats in the Red Sea, rising energy demand from China, and uncertainty over the US Federal Reserve's (Fed) monetary policy direction.
International benchmark Brent crude rose by 1% to $71.37 per barrel at 11.21 a.m. local time (0821 GMT), up from the previous session's close of $70.67.
US benchmark West Texas Intermediate (WTI) increased by 1.1% to $68 per barrel after closing at $67.27 in the prior session.
Israeli airstrikes resumed in Gaza after the ceasefire collapsed, forcing Palestinians in northern and eastern Beit Hanoun to flee toward the city center.
The renewed conflict has heightened supply concerns in the Middle East, home to a significant portion of the world's oil reserves, fueling price gains.
Tensions in the Red Sea remain elevated. Houthi-affiliated Al-Masirah TV reported late Monday that US airstrikes targeted an iron factory in Yemen's Al Hudaydah province and another site in the Al-Araj area.
A separate strike reportedly hit the capital, Sanaa. Washington has yet to comment on these reports.
US President Donald Trump warned Sunday that 'hell will rain down' if Iranian-backed Houthi forces continue targeting Red Sea shipping.
The Houthis had paused their maritime attacks following the Jan. 19 ceasefire between Israel and Hamas but threatened to resume strikes after Israel restricted humanitarian aid to Gaza on March 2.
Since November 2023, the Houthis have targeted commercial vessels in the Red Sea and Gulf of Aden, primarily those linked to Israeli interests, in a show of solidarity with Gaza.
Beyond geopolitical risks, expectations of stronger oil demand from China, the world's largest crude importer, also contributed to increasing prices.
Beijing unveiled a sweeping economic stimulus package on Sunday to bolster domestic consumption, reinforcing market optimism that energy demand will rise.
The prospect of higher Chinese consumption has provided additional support to oil prices.
Moreover, investors are also closely watching the Fed's monetary policy decision, set for Wednesday.
Market pricing suggests near certainty that the Fed will hold interest rates steady, while the first rate cut of the year is anticipated in June.
Analysts note that lower interest rates, coupled with a weaker dollar and increased economic activity, could further lift oil prices in the coming months.
By Duygu Alhan
Anadolu Agency
energy@aa.com.tr