Oil prices up over escalating Middle East tensions, strong demand indicators in China

Oil prices rose on Tuesday amid unresolved tensions in the Middle East and better-than-expected economic data from China, the world's largest oil importer.

International benchmark Brent crude traded at $90.50 per barrel at 10.45 a.m. local time (0845 GMT), an 0.44% increase from the closing price of $90.10 per barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $85.56 per barrel at the same time, a 0.17% rise from the previous session that closed at $85.41 per barrel.

Early on Monday, Israeli Army Chief of Staff Herzi Halevi said Israel would respond to the weekend's Iranian attack, which was launched in response to the April 1 attack on the Iranian Consulate in Damascus, Syria, killing at least 13 people, including seven military advisers.

Following the statement, Iran's deputy foreign minister for political affairs issued a stern warning, saying that any fresh military action by Israel against his country would see a response "within seconds."

The ongoing conflict in the Middle East, where the majority of global oil reserves are located, continues to put upward pressure on oil prices, triggering fears of possible supply disruptions in the region.

Meanwhile, the National Bureau of Statistics (NBS) said Tuesday that China's economy grew above expectations by 5.3% in the first quarter of the year, despite the ongoing decline in the real estate market and weakening domestic demand.

Strong economic data from China further supported upward price movements by indicating strong oil demand in the country.

However, uncertainty over the timing of the US Federal Reserve's (Fed) interest rate limits upward price trends.

Analysts are certain that the Fed will leave the policy rate unchanged in May, while the probability of the bank starting a rate cut fell to 20% in June and 40% in July. The probability of the Fed's first rate cut in September stands at 72%.

“We will need to start a process at some point to bring interest rates back to more normal levels, and my own view is that process will likely start this year,” New York Fed President John Williams said Monday.

Williams added that he did not see the latest inflation data as a "turning point" but noted that the figures will affect his own views and forecasts.

The possibility of a rate cut suppressed oil prices, as generally high interest rates boost the value of the US dollar, making oil more expensive for holders of other currencies.