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Oil prices climbed on Tuesday, recovering from the prior session’s sharp losses as traders closed short positions and rebalanced amid mixed signals from global markets. However, concerns about long-term demand remain elevated, driven by fears of a slowing global economy due to rising trade tensions and U.S. monetary policy uncertainty.
Price Movements
- Brent Crude: ↑ $0.90 (1.4%) to $67.16/barrel (as of 09:01 GMT)
- WTI May Contract: ↑ $0.97 (1.5%) to $64.05/barrel
- WTI June Contract: ↑ $0.92 (1.5%) to $63.33/barrel
Both benchmarks had fallen more than 2% on Monday, primarily due to progress in U.S.-Iran nuclear deal talks, which would raise the prospect of Iranian oil returning to the market and increasing global supply.
Tariff Tensions and Powell Controversy Cast Shadows
The rebound came despite ongoing pressure from macroeconomic developments. On Monday, President Donald Trump renewed criticism of Fed Chair Jerome Powell, calling for immediate interest rate cuts to prevent an economic slowdown.
This reignited fears over Federal Reserve independence, which rattled U.S. markets and sent the dollar index to a three-year low, adding another layer of uncertainty to the global demand outlook.
Trump’s trade policies also remain a key overhang for oil, particularly as tariff-related friction with China and other partners could suppress industrial activity and fuel consumption.
U.S.-Iran Talks Ease Supply Fears
Efforts to revive the 2015 Iran nuclear deal moved forward over the weekend, with both sides agreeing to begin drafting a framework. A successful agreement could ease sanctions on Iranian crude exports, increasing global supply and weighing on prices longer-term.
Analysts noted that this development partially explains the Monday sell-off, as markets priced in the potential for higher future output.
Russian Price Forecast Revised Downward
Adding to the bearish tone, Russia’s economy ministry cut its 2025 Brent crude forecast by nearly 17%, signaling growing official expectations of prolonged price pressure from weaker demand and oversupply concerns.
U.S. Inventory Data in Focus
Ahead of key industry reports:
- Crude oil and gasoline stockpiles are expected to have declined last week.
- Distillate inventories (including diesel and heating oil) likely rose.
The American Petroleum Institute (API) and the Energy Information Administration (EIA) are scheduled to release their weekly figures, which could influence short-term price direction depending on inventory shifts.
Outlook
While today’s bounce reflects some technical buying and short-covering, the broader outlook remains cautious. Investors are watching:
- Fed policy developments
- U.S.-Iran negotiations
- Weekly inventory data
- U.S.-China tariff developments
Any signs of weakening demand or faster-than-expected supply returns could quickly cap gains and renew downward pressure on prices.
