Oil prices stabilized on Tuesday but remained near four-year lows, as recovery in equity markets was offset by growing recession fears amid escalating trade tensions between the United States and China, the world’s two largest economies.
Brent futures rose by 33 cents, or 0.5%, to $64.54 a barrel, while U.S. West Texas Intermediate crude increased by 41 cents, or 0.7%, to $61.11. However, the two benchmarks had dropped significantly on Monday, falling 14% and 15%, respectively, after President Donald Trump’s April 2 announcement of “reciprocal tariffs” on all imports.
On Tuesday, Beijing strongly rejected U.S. demands, vowing not to succumb to what it termed U.S. “blackmail” after Trump threatened to impose an additional 50% tariff on Chinese goods if the country did not remove its 34% retaliatory tariff. China’s Ministry of Commerce said the country “will fight to the end,” heightening concerns about the potential for a global economic slowdown.
The escalating trade dispute further dampened the outlook for global oil demand. Meanwhile, the European Union proposed counter-tariffs of 25% on a range of U.S. goods in retaliation for U.S. tariffs on steel and aluminum.
Earlier in the day, oil prices saw a brief rally of 1%, driven by a rebound in equity markets. However, concerns over the impact of tariffs on oil demand have continued to weigh on the market, as uncertainty remains regarding the potential economic slowdown.
Additionally, President Trump made an unexpected announcement on Monday, stating that the United States and Iran were set to begin direct talks on Tehran’s nuclear program. While the U.S. suggested these talks could lead to more oil barrels entering the market, Iran’s foreign minister indicated that the discussions would be indirect, adding a layer of uncertainty to the potential impact on oil prices.
In the midst of these developments, a preliminary poll indicated that U.S. crude oil and distillate inventories likely rose by approximately 1.6 million barrels, pointing to weaker demand expectations. Weekly inventory data from the American Petroleum Institute is set to be released later on Tuesday, followed by official data from the Energy Information Administration on Wednesday.
