Oil prices experienced modest gains on Tuesday, bolstered primarily by encouraging economic indicators from China, although advances were limited as cautious sentiment lingered amid new trade-related frictions involving Greenland. The ongoing diplomatic and trade tensions originating from the U.S. impacted market dynamics alongside the fundamental data.
By 08:05 Eastern Time (13:05 GMT), benchmark Brent crude for March delivery was trading up by 0.8% at $64.41 per barrel. Similarly, West Texas Intermediate crude futures were also up 0.8%, standing at $59.83 per barrel, following a session without settlement on the preceding Monday.
Positive Economic Signals from China
China's economy demonstrated a slightly stronger rebound than analysts had estimated in the last quarter of 2025, supported by government stimulus measures and a pickup in consumer spending. Official data released on Monday indicated a quarter-on-quarter GDP growth of 1.2% for October through December, surpassing the forecasted 1.1% growth.
This performance lifted China's full-year 2025 GDP growth to 5%, exactly meeting the government’s target set for the third consecutive year as Beijing navigated a tepid post-pandemic recovery in addition to continuing trade pressures from the United States.
Alongside economic recovery, China recorded record levels in its oil sector with refinery throughput climbing 4.1% year-on-year and crude oil production increasing by 1.5%, according to recent official statistics. These peak outputs underscore China’s pivotal role as the world's largest crude oil importer, and the tangible signs of economic improvement present a potential boost to the crude oil market, which faces challenges from existing oversupply.
Geopolitical Tensions Affecting Market Stability
Market volatility was evident on Monday as oil prices swung in response to U.S. President Donald Trump's announcement threatening to impose tariffs on several key European nations, including France, Denmark, and the United Kingdom. These threats are directly linked to a contentious demand for these countries to transfer ownership of Greenland to the United States.
Trump proposed tariffs as steep as 25% and has not ruled out deploying military forces to secure Greenland, underscoring national security concerns he attributes to acquiring the territory. These aggressive maneuvers, combined with recent U.S. involvement elsewhere such as Venezuela, have injected a degree of wariness among investors about potential further military or trade escalations impacting global markets.
Upcoming Reports and Data to Watch
Beyond the geopolitical climate, attention is shifting to the forthcoming monthly report by the International Energy Agency (IEA), expected this Wednesday. This report is highly anticipated as the IEA has issued repeated warnings concerning a possible oversupply situation developing in the oil market for 2026 and may provide updated forecasts for 2027.
The IEA’s insights follow last week’s monthly update from the Organization of Petroleum Exporting Countries (OPEC), which projected a positive outlook regarding oil demand for the next two years.
Adding to the analytical focus are forthcoming reports detailing U.S. crude inventories. Given that the U.S. stands as the world's largest oil producer, inventory levels will provide valuable indicators on the supply-demand balance moving forward.
Contributing to the analysis in this report: Ambar Warrick.