Oil Swings As Trump’s Tariffs Drive Uncertain Economic Outlook

Oil swung between gains and losses as uncertainty about US President Donald Trump’s tariff plans muddies the economic outlook.

West Texas Intermediate futures edged up further above $71 a barrel, after gaining 3.1% on Monday. US equities retreated and gold extended its increase the day before Trump was set to release reciprocal tariff plans that have raised worries about the strength of the world’s largest economy.

Trump has also threatened so-called “secondary tariffs” on buyers of Russian oil, potentially hurting flows from one of the world’s top three producers, before later softening his tone. Elsewhere, Iran’s Supreme Leader Ayatollah Ali Khamenei said any attack by the US or Israel would be met with “a firm retaliatory strike.”

“There is a full slate of supply-disrupting themes, most still developing in real time,” Royal Bank of Canada analysts including Brian Leisen and Helima Croft wrote in a note. “That being said, there is now more downside demand risk than many were anticipating at the end of last year. Potential market impacts have effectively become less clear, which has weighed on broad participation in the oil space.”

Trump’s threat of penalties on Russia has added to a more positive short-term outlook for prices, with key timespreads pointing to a tighter market and derivatives tied to the vital North Sea benchmark surging. At the same time, WTI entered overbought territory on its nine-day relative strength index for the first time since Trump took office, signaling that the past three weeks’ rally may be set to pause.

Crude ended the first quarter little changed, despite significant swings in prices, as traders were buffeted by geopolitical risks, forecasts for a glut and increased supply from OPEC+ starting this month. While tighter sanctions on Iran and Russia could crimp supply, tariffs from the US may hurt global growth and energy demand.

• WTI for May delivery rose 0.2% to $71.64 a barrel at 10:34 a.m. in New York.

• Brent for June settlement advanced 0.2% to $74.91 a barrel.