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Oil Extends Climb on Supply Fears, Trade War Concerns Cap Gains

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
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Oil Extends Climb on Supply Fears, Trade War Concerns Cap Gains

FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)
FILE - Pump jacks extract oil from beneath the ground in North Dakota, May 19, 2021. (AP Photo/Matthew Brown, File)

Oil prices inched higher on Tuesday after threats by US President Donald Trump to impose secondary tariffs on Russian crude and attack Iran, though worries about the impact of a trade war on global growth capped gains.

Brent futures rose 21 cents, or 0.3%, to $74.98 a barrel at 0645 GMT, while US West Texas Intermediate crude futures climbed 22 cents, or 0.3%, to $71.70.

The contracts settled at five-week highs a day earlier.

"Near-term risks are skewed to the upside, with US threats of secondary tariffs on Russian and Iranian oil leading market participants to price for the risks of tighter oil supplies," said Yeap Jun Rong, market strategist at IG, Reuters reported.

However, broader themes still revolve around concerns of upcoming tariffs weighing on global demand, along with prospects of increased supply from OPEC+ and the US, said Yeap.

A Reuters poll of 49 economists and analysts in March projected that oil prices would remain under pressure this year from US tariffs and economic slowdowns in India and China, while OPEC+ increases supply.

Slower global growth would dent fuel demand, which might offset any reduction in supply due to Trump's threats.

After news of Trump's threats initially boosted prices on Monday, traders told Reuters they viewed the president's warnings to Russia, at least, as a bluff.

Trump, on Sunday, told NBC News that he was very angry with Russian President Vladimir Putin and would impose secondary tariffs of 25% to 50% on Russian oil buyers if Moscow tries to block efforts to end the war in Ukraine.

Tariffs on buyers of oil from Russia, the world's second largest oil exporter, would disrupt global supply and hurt Moscow's biggest customers, China and India.

Trump also threatened Iran with similar tariffs and bombings if Tehran did not reach an agreement with the White House over its nuclear program.

"For now, it appears to be just a threat to Russia and Iran. However, if it becomes a reality, it creates plenty of upside risk to the market given the significant oil export volumes from both countries," said ING commodities strategists on Tuesday.

The market will be watching for weekly inventory data from US industry group the American Petroleum Institute later on Tuesday, ahead of official statistics from the Energy Information Administration on Wednesday.

Five analysts surveyed by Reuters estimated on average that US crude inventories fell by about 2.1 million barrels in the week to March 28.

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China Hits Back at US and Will Raise Tariffs on American Goods from 84% to 125%

An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura
An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura
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China Hits Back at US and Will Raise Tariffs on American Goods from 84% to 125%

An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura
An electronic board shows Shanghai and Shenzhen stock indices as people walk on a pedestrian bridge at the Lujiazui financial district in Shanghai, China April 11, 2025. REUTERS/Go Nakamura

China announced Friday that it will raise tariffs on US goods from 84% to 125% — the latest salvo in an escalating trade war between the world's two largest economies that has rattled markets and raised fears of a global slowdown.

While US President Donald Trump paused import taxes this week for other countries, he raised tariffs on China and they now total 145%. China has denounced the policy as “economic bullying" and promised countermeasures. The new tariffs begin Saturday.

Washington's repeated raising of tariffs “will become a joke in the history of the world economy,” a Chinese Finance Ministry spokesman said in a statement announcing the new tariffs. “However, if the US insists on continuing to substantially infringe on China’s interests, China will resolutely counter and fight to the end.”

China’s Commerce Ministry said it would file another lawsuit with the World Trade Organization against the US tariffs.

“There are no winners in a tariff war,” Chinese leader Xi Jinping said during a meeting with the Spanish Prime Minister Pedro Sanchez, according to a readout from state broadcaster CCTV. “For more than 70 years, China has always relied on itself ... and hard work for development, never relying on favors from anyone, and not fearing any unreasonable suppression.”

Chinese Foreign Minister Wang Yi on Friday said China stands firm against Trump’s tariffs not only to defend its own rights and interests but also to “safeguard the common interests of the international community to ensure that humanity is not dragged back into a jungle world where might makes right.”

Wang made the remarks when he met Rafael Mariano Grossi, director general of the International Atomic Energy Agency in Beijing. Wang said China will “work together with other countries to jointly resist all retrogressive actions in the world.”

Trump's on-again, off-again measures have caused alarm in stock and bond markets and led some to warn that the US could be headed for a recession. There was some relief when Trump paused the tariffs for most countries — but concerns remain since the US and China are the world's No. 1 and No. 2 economies, respectively.

“The risk that this escalating trade war tips the world into a recession is rising as the two largest and most powerful countries in the world continue to punch back with higher and higher tariffs,” Jennifer Lee, a senior economist at BMO Capital markets, wrote Friday. “No one truly knows when this will end.”

Chinese tariffs will affect goods like soybeans, aircrafts and their parts and drugs — all among the country's major imports from the US Beijing, meanwhile, suspended sorghum, poultry and bonemeal imports from some American companies last week, and put more export controls on rare earth minerals, critical for various technologies.

The United States' top imports from China, meanwhile, include electronics, like computers and cell phones, industrial equipment and toys — and consumers and businesses are likely to see prices rise on those products, with tariffs now at 145%.

Trump announced on Wednesday that China would face 125% tariffs, but he did not include a 20% tariff on China tied to its role in fentanyl production.

White House officials hope the import taxes will create more manufacturing jobs by bringing production back to the United States — a politically risky trade-off that could take years to materialize, if at all.