Oil prices rose by more than 1% on Tuesday, recovering from a sharp drop to a nearly four-year low in the previous session due to concerns that US tariffs could reduce demand and lead to a global recession, although analysts warn that downside risks remain, UNN writes with reference to Reuters.
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Brent crude futures rose 72 cents, or 1.1%, to $64.93 a barrel, while West Texas Intermediate crude futures rose 75 cents, or 1.2%, to $61.45 at 8:35 Kyiv time.
As of Monday, Brent and WTI oil prices fell by 14% and 15%, respectively, after US President Donald Trump announced "mutual tariffs" on all imports on April 2.
Oil prices recovered some of those losses during the rise, which was boosted by more stable activity in stock markets, said Warren Patterson, head of commodity strategy at ING.
"The market has sold off heavily in recent days as it has begun to price in a significant drop in demand; however, it is not yet clear how strong a drop in demand we will see," he said.
ING's note on Tuesday also said that risks remain skewed to the downside due to US President Donald Trump's threats to impose an additional 50% tariff on Chinese goods if Beijing does not cancel its 34% retaliatory tariff by Tuesday.
"It is unlikely that China will change its policy. As such, we are likely to see further escalation, which will only exacerbate growth fears and concerns about oil demand," the note said.
On Monday, oil prices fell 2% on fears that President Trump's latest tariffs could lead the global economy into recession and reduce demand for energy. However, markets are expecting a potential limit to the downward trajectory of oil prices.
Trump argues that the tariffs - at least 10% for all US imports with target rates of up to 50% - will help revive the US industrial base, which he says is shrinking due to decades of trade liberalization.
While many countries are seeking tariff relief or at least reductions, some, including China, the world's second-largest economy after the United States, have announced plans to impose retaliatory tariffs.
Beijing has publicly stepped up efforts to stabilize its capital market and vowed not to succumb to "blackmail" from the United States.
"If China stands firm, the overall tariff rate on its imports into the US will rise to a striking 104%, which is likely to trigger a further deterioration in risk sentiment, a sharp fall in global stock markets and accelerate the pace of the global economy's decline into recession," Tony Sycamore said in a note.
A preliminary Reuters poll on Monday showed that US crude oil and distillate inventories are expected to have risen by an average of about 1.6 million barrels last week, another sign that the market is expecting weak demand.