Oil prices pulled back on Monday, trimming gains that were initially driven by fears of escalating Middle East tensions. While geopolitical risks had pushed prices higher in recent days, the market has cooled as fears of a broader conflict have subsided, shifting the focus back to China’s sluggish demand for oil, which remains a key concern.

After a brief rally, Brent crude fell 0.7% to $91.50 per barrel, while WTI crude dropped 0.8% to $87.20. The retreat reflects easing concerns over supply disruptions from the Middle East, as no immediate escalation in the region has materialized. However, analysts warn that geopolitical risks remain, meaning oil markets could still experience volatility if the situation deteriorates.

China’s weakening economic growth is once again in the spotlight, adding downward pressure on oil prices. As the world’s largest importer of crude, China’s flagging demand is seen as a major drag on the market. Recent data showing softer manufacturing activity and lower-than-expected economic growth has dampened hopes of a strong recovery in Chinese oil demand.

Meanwhile, OPEC+ production cuts continue to offer some support for prices, but the outlook remains clouded by uncertainty around global economic conditions. With China’s demand faltering and interest rate hikes in the US and Europe weighing on broader global demand, traders are cautious about the sustainability of any price rallies.

In the short term, oil prices will likely remain sensitive to both geopolitical developments and economic data from China. As long as China’s demand concerns persist, any upward movement in oil prices could be limited, even if supply risks from the Middle East remain on the radar.