Oil prices climbed on Monday as investors appeared to have discounted escalating trade tensions by U.S. President Donald Trump’s tariff threats.
Brent crude futures rose by 74 cents or 1% to $75.40 per barrel by 09:38 GMT while U.S. West Texas Intermediate (WTI) crude also gained 1%, or 72 cents to settle at $71.72 per barrel.
The rebound comes after crude posted its third consecutive weekly decline, weighed down by fears that a prolonged global trade war could slow economic growth and dampen energy demand.
However, analysts suggest that the market is adjusting to ongoing tariff uncertainties and their potential impact.
“It’s tariff uncertainty which is the name of the game. This affects risk appetite in general and has spillover effects into oil,” said Harry Tchilinguiran, group head of research at Onyx Capital.
President Trump announced plans to impose 25% tariffs on steel and aluminum imports into the U.S., escalating trade disputes with key partners. Just last week, he introduced tariffs on Canada, Mexico, and China but later suspended them for the neighboring countries.
Investors now seem to be taking a more measured approach, recognizing the fluidity of the situation.
“The market has realized tariff headlines are likely to continue in the weeks and months ahead,” noted Tony Sycamore, a Sydney-based analyst at IG. “So perhaps investors are coming to the conclusion it’s not the best course of action to react to every headline negatively.”
Meanwhile, China’s retaliatory tariffs on certain U.S. exports are set to take effect, with little progress reported in negotiations between Washington and Beijing. Oil and gas traders are seeking exemptions from Beijing for U.S. crude and liquefied natural gas (LNG) imports, underscoring the economic stakes of the ongoing dispute.
Geopolitical factors are also influencing market sentiment. U.S. sanctions imposed on January 10 have disrupted Russian oil supplies to China and India, two of its biggest clients.
In addition, Washington has intensified pressure on Iran, with the U.S. Treasury imposing new sanctions on individuals and tankers facilitating the shipment of Iranian crude to China.
Citi analysts noted that while Trump’s policies aim to drive energy prices lower, geopolitical risks, particularly the ongoing sanctions on Iran, could provide upside pressure.
“We see oil likely trading sideways to down over the next month or so, with the fundamental downward pressure building on crude in our base case throughout the year,” they stated.
Despite short-term volatility, Citi forecasts Brent crude to average between $60 and $65 per barrel in the second half of 2025 as Trump’s persistent push to lower energy prices is expected to weigh on the market.
For now, oil prices remain buoyed by shifting investor sentiment, but with geopolitical tensions and trade uncertainties still looming, the market remains highly reactive to policy shifts and supply dynamics.
