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Oil prices settled higher Tuesday, supported by China's monetary stimulus boosting global oil demand and concerns over Middle East conflicts disrupting supplies.

At 2:30 p.m. ET (18:30 GMT), West Texas Intermediate (WTI) crude futures rose 1.7% to settle at $71.56 a barrel, while Brent oil futures increased 1.8% to $74.50 a barrel.

Chinese Stimulus Supports

Crude prices surged after Chinese officials announced several measures aimed at stimulating economic growth. The People’s Bank of China (PBOC) will cut reserve requirements for banks by 50 basis points to provide more liquidity. Additionally, the government will reduce mortgage rates for existing loans to revitalize the struggling property market.

These actions came after the PBOC reduced a short-term repo rate on Monday to further enhance liquidity. China remains the largest crude importer globally; however, an economic downturn raised concerns about future demand.

Middle East Tensions, Supply Disruptions Remain in Play

The crude market also benefited from ongoing tensions in the Middle East. Israel targeted Hezbollah-linked sites in Lebanon, potentially escalating the longstanding conflict. Israel continues its offensive against Hamas in Gaza, fueling worries over further supply disruptions.

In the U.S., attention turned to tropical storm Helene— the second storm in the Gulf of Mexico this month — following Hurricane Francine’s impact on the oil-rich region. Prolonged supply disruptions could tighten U.S. oil markets and lead to higher prices shortly.

Middling PMIs Weigh on Demand

The combination of news and optimism regarding lower interest rates has led to a rebound in prices from near three-year lows. However, mixed purchasing managers index (PMI) readings from major economies raised concerns about slowing demand.

The PMIs from the U.S., eurozone, and Japan signaled sluggish manufacturing activity, potentially indicating declining crude demand. While service PMI growth showed resilience, prolonged manufacturing slowdowns could present challenges for crude.

Despite these concerns, oil bulls remain hopeful that interest rate cuts from key central banks will counterbalance the trend.

Contributed by Ambar Warrick