For the fourth consecutive day, Brent crude prices have continued their upward trajectory, marking a 4.5% gain.
This rise is largely driven by growing optimism regarding a rebound in China’s economic activity, bolstered by government stimulus measures and a push to accelerate growth. Chinese President Xi Jinping’s recent remarks on implementing proactive policies for economic growth in 2025 have further fueled expectations, particularly in the manufacturing sector, which is heavily reliant on energy inputs.
Despite relatively thin trading liquidity on the first trading day of 2025, the trend so far suggests a favorable outlook for higher oil prices. However, market sentiment remains cautious due to geopolitical risks, especially with the upcoming inauguration of former President Donald Trump on January 20. His policy plans, particularly regarding Ukraine and ongoing Middle East tensions, could stir fresh uncertainties in the global oil market, potentially reigniting a risk premium that has previously influenced Brent prices.
The market’s broader outlook for 2025 suggests crude oil prices may stabilize in the mid-$70s per barrel. However, geopolitical developments remain a key factor capable of driving prices beyond expected equilibrium levels. In addition, the growing optimism surrounding industrial activity in China could challenge existing market forecasts, with potential implications for both global demand and oil pricing.
At the start of the year, the convergence of geopolitical uncertainties and China’s economic resurgence has set the stage for a potentially volatile period in the oil markets, with prices continuing to be shaped by these dual forces. Whether this upward movement is sustained will depend on how these factors evolve in the coming weeks.