Oil prices rose on Tuesday, recovering a small portion of recent losses as traders remained apprehensive over slowing demand amid a rapidly escalating U.S.-led trade war.
Brent oil futures expiring in June rose 1.1 percent to $64.93 a barrel, while West Texas Intermediate crude futures increased by 1.3 percent to $61.21 a barrel by 22:15 ET (02:15 GMT).
Oil prices had slumped to a four-year low in recent sessions, following U.S. President Donald Trump unveiling steep reciprocal tariffs on several major economies. These tariffs are scheduled to take effect from Wednesday, raising concerns among market participants.
A significant point of worry for oil markets is the intensifying trade tensions between China and the U.S. Beijing has retaliated against Trump’s latest tariffs, vowing to “fight to the end” if the president escalates his tariff measures further.
Markets are increasingly apprehensive that Trump’s tariffs will disrupt global economic growth and adversely affect oil demand. These fears are compounded by growing concerns of a potential U.S. recession, adding to the overall negative sentiment.
Read more: Oil prices hit four-year low of $63.93 amid Trump tariff fears
Trump tariffs and China’s response
Trump on Monday threatened to impose an additional 50 percent tariffs on China if Beijing did not reverse its recent retaliatory measures. However, Beijing condemned this threat, warning of further escalation in the trade conflict if Trump did not reconsider.
A spokesperson from the Commerce Ministry labeled Trump’s new tariff threats as a “mistake on top of a mistake,” highlighting the growing tensions.
China’s economic support measures
Simultaneously, Beijing is preparing additional economic support to mitigate the effects of Trump’s tariffs. Reports indicate that China is considering expediting its planned stimulus measures, while the People’s Bank has also committed to providing more liquidity support for local markets.
China is the world’s largest oil importer, yet crude demand in the country has steadily declined in recent years due to ongoing economic weakness. Trump’s tariffs could potentially exacerbate this trend, although Beijing is expected to enhance its stimulus efforts in response to the new tariffs.
Geopolitical tensions in the Middle East and Ukraine
Oil prices are also influenced by persistent geopolitical tensions in the Middle East, contributing to a risk premium in the market. Meanwhile, Russia appears to be stalling on a ceasefire in Ukraine, amid ongoing efforts by U.S. officials to negotiate a minerals deal with Kyiv and encourage Moscow to engage in dialogue.
