Oil prices rose in Asian trade on Tuesday, recovering a small portion of recent losses as traders remained on edge over slowing demand amid a rapidly escalating U.S.-led trade war.
Oil prices had slumped to a four-year low in recent sessions, after U.S. President Donald Trump unveiled steep reciprocal tariffs on several major economies. Trump’s tariffs are set to take effect from Wednesday.
A particular point of concern for oil markets is growing trade tensions between China and the U.S., after Beijing retaliated against Trump’s latest tariffs and vowed to “fight to the end” if the president increased his tariffs even further.
Markets feared that Trump’s tariffs will disrupt global economic growth and hurt oil demand. Growing fears of a U.S. recession adding to this notion.
Brent oil futures expiring in June rose 1.1% to $64.93 a barrel, while West Texas Intermediate crude futures rose 1.3% to $61.21 a barrel by 22:15 ET (02:15 GMT).
Trump tariffs, China retaliation in focus
Trump on Monday threatened to impose an additional 50% tariffs on China if Beijing did not reverse its recent retaliatory measures.
But Beijing decried this threat, warning of a further escalation in the trade conflict if Trump did not back off.
Trump’s new tariff threats were a “mistake on top of a mistake,” a Commerce Ministry spokesperson said in a statement.
At the same time, Beijing was also seen preparing more economic support to offset the impact of Trump’s tariffs. Reports said China was considering expediting its planned stimulus measures, while the People’s Bank also vowed more liquidity support for local markets.
China is the world’s biggest oil importer, although crude demand in the country has steadily declined in recent years on persistent economic weakness. Trump’s tariffs could potentially escalate this trend.
But Beijing is also expected to ramp up its stimulus efforts in response to the new tariffs.
Middle East, Russia-Ukraine tensions persist
Oil prices saw some risk premium from persistent geopolitical tensions in the Middle East, as Israel kept up its offensive against Hamas, while the Palestinean group also struck back against Jerusalem.
An Israel-Hamas ceasefire largely collapsed in March amid disagreements over the release of hostages by Hamas.
Elsewhere, Russia appeared to be dragging its feet over a Ukraine ceasefire, amid persistent efforts by U.S. officials to strike a minerals deal with Kyiv while also bringing Moscow to the negotiating table.
