The U.S. official told Reuters that Trump’s directive orders the U.S. Treasury secretary to impose “maximum economic pressure” on Iran, including sanctions and enforcement mechanisms on those violating existing sanctions.
U.S. West Texas Intermediate (WTI) crude fell 46 cents, or 0.63%, to close at $72.70. It fell more than 3% to its lowest since late December during the session, amid trade war fears between the U.S. and China.
Global benchmark Brent crude futures rose 24 cents, or 0.32%, to close at $76.20.
The reimposition of “maximum pressure” on Iran is capping losses from the tariff drama going on between Beijing and Washington right now, according to Phil Flynn, analyst at Price Futures Group.
“The reason why oil was down near the lower end of the trading range was the China retaliation, and it went back up because of the ‘maximum pressure’ on Iran,” Flynn said.
Iranian crude exports shot to the highest level in years in 2024 as the country found ways to sidestep punitive sanctions targeting its revenue.
Traders are eyeing efforts underway to schedule a call between Trump and Chinese President Xi Jinping.
The two presidents will not speak on Tuesday, the Wall Street Journal cited a U.S. official as saying, despite a Trump trade adviser’s comment earlier in the day that a call was scheduled.
Earlier, White House spokeswoman Karoline Leavitt had said a call between the heads of the world’s two largest economies “will happen very soon.”
New 10% U.S. tariffs on Chinese imports took effect on Tuesday, spurring retaliatory tariffs announced by Beijing.
“Oil was down on the China retaliation, I think it’s the expected Trump-Xi call bringing us back up, and we kind of know how those go now, in terms of walking this all back,” said John Kilduff, a partner at Again Capital in New York.
The U.S. president suspended his threat of steep tariffs on Mexico and Canada on Monday, agreeing to a 30-day pause in return for concessions on border and crime enforcement with the two neighboring countries.
Those postponed tariffs include a 25% levy on all products from Mexico and Canada, with a 10% tariff on energy imports from Canada, all of which had been set to take effect on Tuesday.
Ongoing trade tensions between the U.S. and China may dampen demand for oil, leading to continued pressure on prices.
“The tit-for-tat measures out from China may not stop at just the 10% tariffs on crude oil from the U.S., which can also see a deliberate attempt to weaken the yuan if the U.S. fires back with more tariffs on China exports to the U.S.,” said Kelvin Wong, senior market analyst at OANDA.
“Overall such actions are likely to give rise to a stronger U.S. dollar that in turn weakens ... oil prices given that OPEC+ members are still on track to increase oil supply gradually from April.”
China’s 2024 crude oil imports from the United States accounted for 1.7% of its total crude imports, customs data shows.
“The Chinese are smart targeting crude oil and liquefied natural gas (LNG), because that’s effectively going to knock them out of the U.S. market as you’re adding $5-7 a barrel, depending on pricing and that’s just not competitive,” said Again Capital’s Kilduff.
On the demand side, investors are awaiting U.S. oil stockpile data from the American Petroleum Institute. Analysts polled by Reuters expect crude inventories to have risen but gasoline and distillate inventories are likely to have declined.