West Texas Intermediate (WTI) crude oil prices extended their recovery for a second consecutive session on Monday, rebounding from last week’s low of around $70.25—the weakest level since December 30. The commodity is currently trading near $71.25, up over 0.60% for the day, though lingering economic uncertainties have kept bullish momentum in check.
Iran Sanctions Stoke Supply Concerns
The Trump administration has imposed fresh sanctions targeting individuals and vessels involved in exporting Iranian crude to China. Additionally, President Trump signaled a return to a “maximum pressure” policy on Iran, aiming to reduce Tehran’s oil exports to zero. These developments have raised concerns about potential disruptions to Iranian supply, providing support for oil prices.
Trade Tariffs and Demand Concerns Weigh on Prices
Despite supply-side fears, oil prices remain constrained by broader economic concerns. Trump’s latest threat to impose a 25% tariff on all steel and aluminum imports, alongside reciprocal trade duties, has fueled worries about global economic growth and energy demand. The ongoing U.S.-China trade dispute further adds to the uncertainty, prompting caution among crude oil bulls.
Stronger U.S. Dollar Limits Upside
A modestly stronger U.S. dollar (USD) is also exerting pressure on oil prices. Expectations that Trump’s protectionist trade policies could drive inflation higher—and limit the Federal Reserve’s ability to cut interest rates—have bolstered the greenback. A stronger USD generally makes oil more expensive for foreign buyers, capping potential gains.
Market Outlook: Cautious Optimism Prevails
While oil prices have rebounded from recent lows, a lack of strong buying momentum suggests traders remain cautious. Market participants await further confirmation that the recent three-week downtrend has bottomed out before committing to bullish positions. The focus now shifts to broader geopolitical developments and upcoming economic data for fresh price direction.
