Oil Prices Begin 2025 Strong as Demand for Middle East Crude Rises

NEW YORK — Oil futures climbed on Monday, continuing a strong start to the new year amid signs of robust demand for Middle Eastern crude and optimism about Chinese economic stimulus.

Crude ended last week at nearly three-month highs, bolstered by a stronger physical market in the Middle East.

West Texas Intermediate crude delivery rose 33 cents, or 0.4%, to $76.84 a barrel on the New York Mercantile Exchange. Global benchmark Brent crude added 34 cents, or 0.4%, to $76.85 a barrel on ICE Futures Europe. Natural gas futures surged 9.2% to $3.663 per million British thermal units, driven by expectations of colder weather increasing demand while potentially curtailing production.

The strength in the market for crude "appears to be on the back of a stronger physical market in the Middle East. This is well reflected in the Brent/Dubai spread which has traded into negative territory recently," Warren Patterson and Ewa Manthey, commodity strategists at ING, said in a note.

"There are suggestions that Asian buyers have been looking to other Middle Eastern grades amid broader sanctions against Russia and Iran," the strategists said, noting there are also concerns about how "hawkish" the incoming Trump administration will be toward Iran.

Stricter enforcement of sanctions would tighten the market, but would also leave the Organization of the Petroleum Exporting Countries and its allies an opportunity to lift production, they said. 

The White House on Monday said President Joe Biden is moving to ban most new oil and natural gas drilling in coastal waters. 

"My decision reflects what coastal communities, businesses, and beachgoers have known for a long time: that drilling off these coasts could cause irreversible damage to places we hold dear and is unnecessary to meet our nation's energy needs. It is not worth the risks," Biden said in a statement.

Additional Price Movements:

• February gasoline increased by 0.5% to $2.063 a gallon.
• February heating oil rose by 1%.