Singapore – Oil prices edged higher on Monday after the United States reaffirmed its commitment to sustained military strikes against Yemen’s Iran-aligned Houthi rebels, following repeated attacks on shipping in the Red Sea.
Brent crude futures rose $0.41 (0.6%) to $70.99 per barrel as of 3:36 a.m. GMT, while U.S. West Texas Intermediate (WTI) crude climbed $0.40 (0.6%) to $67.58 per barrel.
Biggest U.S. Military Operation in the Middle East Since Trump Took Office
The U.S. airstrikes, which the Houthi-run health ministry claims have killed at least 53 people, represent the most extensive U.S. military action in the region since President Donald Trump assumed office in January. A senior U.S. official indicated that the campaign could last for weeks.
Houthi assaults on Red Sea shipping lanes have disrupted global commerce, prompting Washington to escalate its military response. The ongoing attacks have forced the U.S. to intercept missiles and drones, adding to mounting security concerns in the region.
Oil Markets React Amid Economic Uncertainty
Last week, oil prices recorded a modest gain, breaking a three-week losing streak amid ongoing worries about a global economic slowdown. Market sentiment has been further weighed down by escalating U.S. trade tensions with key partners, including China, Canada, and Mexico.
On Monday, China reported mixed economic data, with industrial output slowing in January-February while retail sales saw slight acceleration. The Chinese government announced a “special action plan” to stimulate domestic consumption and economic recovery amid the U.S. trade dispute.
Goldman Sachs lowered its oil price forecast, citing expectations of weaker U.S. economic growth and an oversupply from OPEC and its allies (OPEC+). The bank now expects Brent crude to average $71 per barrel in December 2025 (down $5 from previous estimates) and $68 per barrel in 2026.
U.S. Economic Outlook and Fed Policy
Consumer sentiment in the U.S. plunged to its lowest level in two-and-a-half years in March, driven by fears that Trump’s aggressive tariff policies will increase prices and slow economic growth.
The U.S. Federal Reserve, set to meet next week, is expected to maintain its benchmark interest rate at 4.25%-4.50%, having already cut it by 100 basis points since September. The central bank continues to assess the economic impact of recent trade and military developments.
As geopolitical tensions persist and economic uncertainties loom, oil markets are expected to remain volatile in the coming weeks.
