Oil prices were moving higher on Tuesday, though gains were checked amid an escalation in the trade war between the United States and China.
Brent crude futures were at $70.30 a barrel at 0318 GMT, up 7 cents, or 0.1%, from their last close. Brent ended the previous session down 0.6%.
U.S. West Texas Intermediate (WTI) crude futures were at $61.11 per barrel, up 7 cents, or 0.1%, from their previous settlement. WTI closed down 1% on Monday.
Headlines from the Middle East grabbed attention early in the session after Saudi Arabia said two of its oil tankers were among those attacked off the coast of the United Arab Emirates, describing it as an attempt to undermine security of supply amid United States-Iran tensions.
But analysts said the U.S.-China trade war continued to cast a pall on the market as a whole.
“This ramp-up in trade tensions, which I don’t really think people saw coming, is going to have an impact, a broad impact,” Phin Ziebell, senior economist at National Australia Bank said by phone. “You can’t avoid the impact on the oil market.”
China on Monday ignored a warning from U.S. President Donald Trump and moved to impose higher tariffs on a range of U.S. goods including frozen vegetables and liquefied natural gas.
The U.S. Energy Department said on Monday that it was confident global oil markets are well supplied.
But that may change by the end of the year as oil production capacity could drop to under 1% of global supply demand by the end of the year after the U.S. imposed sanctions on Iran and Venezuela, analyst said.
Saudi Arabia, the world’s biggest oil exporter, is likely to raise its production much more cautiously than last year when production from the Kingdom rose to record highs above 11 million bpd in November after calls from Trump to replace Iranian barrels.
Riyadh for now is reluctant to boost oil supply too quickly and risk a price crash and a build-up in inventories, despite pressure from the Trump administration to reduce oil prices.
Reporting by Aaron Sheldrick and Colin Packham; Editing by Kenneth Maxwell