Crude Oil Prices Surge Amid Geopolitical Tensions and Market Outlooks

Crude oil prices saw a significant jump at the start of the week following U.S. attacks on the Yemeni Houthis. The U.S. Department of Defense announced that these strikes would continue until the Houthis cease their attacks on ships traversing the Red Sea, a move that is already impacting the global oil market.

At the time of writing, Brent crude was trading at $71.10 per barrel, while West Texas Intermediate (WTI) was priced at $67.70 per barrel. Both benchmarks saw an upward trend from the opening and are expected to rise further unless bearish news, such as the Houthis agreeing to stop bombing ships, surfaces later in the day.

Impact of Houthi Attacks on Maritime Transport

The ongoing Houthi offensive has caused considerable disruption in maritime transport, leading to longer shipping routes from Asia to Europe. To avoid the conflict zone in the Red Sea, ships must now reroute around Africa, adding weeks to their journey. This has resulted in higher transport costs and increased fuel demand from the shipping industry, further driving up oil prices.

Meanwhile, China, the world’s largest importer of crude oil, is showing mixed economic signals. While industrial production slowed over the first two months of the year, retail sales saw an increase, suggesting some resilience in consumer demand. Chinese refinery throughput also edged 2.1% higher compared to the same period last year, driven by holiday travel demand and the launch of a new refinery late last year, adding 200,000 barrels per day (bpd) to overall demand. Another 200,000 bpd will be added this month.

Goldman Sachs Reduces Price Outlook for Oil

Despite the short-term surge in prices, Goldman Sachs analysts have lowered their long-term price outlook for crude oil. The revision is based on expectations of slower U.S. economic growth and a potential increase in supply from OPEC+.

The bank reduced its December 2025 forecast for Brent crude by $5 to $71 per barrel, citing risks related to ongoing tariff wars between the U.S. and its trade partners. Analysts argue that tariffs can hurt economic growth by raising the cost of goods and commodities, and as crude oil is the most traded commodity globally, this could dampen demand.

Furthermore, Goldman Sachs believes that the oil market will remain oversupplied throughout 2025, contributing to a bearish outlook. This aligns with views expressed by other industry majors like Gunvor and Vitol, as well as the International Energy Agency (IEA), which has called for more investment in oil and gas production despite the oversupply concerns.

OPEC+ and Supply Adjustments

OPEC+ has made a decision to increase oil supply by 138,000 bpd starting next month, marking a wind-down of the production cuts made in 2022. However, this move is likely to be temporary, and OPEC+ is not expected to continue increasing supply indefinitely, especially if prices continue to show signs of decline. Russia’s Deputy Prime Minister Alexander Novak has indicated that the decision to add more supply could be reversed as soon as May if prices slump further.