Oil Prices Inch Higher on Supply Jitters, But Trade War Fears Limit Upside
Crude oil prices rose modestly on Tuesday, driven by growing concerns over potential disruptions to global supply following new threats from U.S. President Donald Trump. However, gains remained capped as investors weighed the broader risks of an escalating trade war on global demand.
By 06:45 GMT, Brent crude had added 21 cents to reach $74.98 a barrel, while West Texas Intermediate (WTI) was up 22 cents at $71.70. Both benchmarks had already hit their highest levels in five weeks on Monday.
The upward pressure came after President Trump hinted at the possibility of imposing new tariffs — potentially as high as 50% — on countries that purchase Russian oil. He also issued strong warnings toward Iran over its nuclear program, suggesting potential sanctions or even military retaliation.
“Markets are starting to price in supply risks related to geopolitical tensions, especially with U.S. threats targeting key oil exporters like Russia and Iran,” said Yeap Jun Rong, strategist at IG. Still, he noted that expectations of higher output from both OPEC+ and U.S. producers, along with trade-related headwinds, are limiting bullish momentum.
A recent Reuters survey of nearly 50 analysts suggested that oil prices could face persistent downward pressure this year due to softening demand in China and India, alongside increased supply from the U.S. and its allies. While geopolitical shocks may temporarily lift prices, the underlying demand picture remains fragile.
Following Trump’s comments, some market participants expressed skepticism, seeing the statements more as political messaging than imminent policy. “Unless we see concrete action, the market is unlikely to overreact,” one trader said anonymously.
Meanwhile, focus is shifting toward upcoming U.S. inventory data. Industry figures from the American Petroleum Institute (API) are expected later Tuesday, followed by official data from the Energy Information Administration (EIA) on Wednesday. Preliminary estimates suggest a drop in U.S. crude stockpiles of about 2.1 million barrels for the week ending March 28.
While recent rhetoric has added some short-term volatility, traders remain cautious. If tensions continue to build without clear policy outcomes, oil may remain stuck in a narrow range — with upside potential constrained by global growth concerns.
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