Oil Prices Edge Higher After Trump Warning, But Gains Capped by U.S. Stance and Ceasefire Uncertainty
Oil prices climbed modestly in Asian trading on Tuesday following a warning from U.S. President Donald Trump directed at Tehran over the ongoing conflict with Israel, keeping concerns about potential supply disruptions alive.
However, crude quickly gave up a portion of its early gains after U.S. officials clarified that Washington had no plans to become directly involved in the conflict, easing fears of an immediate escalation between Israel and Iran.
Reports suggesting Iran was seeking a ceasefire, along with weaker-than-expected economic data from China—the world’s largest oil importer—also weighed on sentiment and limited further price increases that were initially driven by last week’s Middle East tensions.
By 21:27 ET (01:27 GMT), Brent crude futures for August delivery were up 0.3% at $73.46 per barrel, while West Texas Intermediate (WTI) futures rose 0.4% to $70.58 per barrel.
Trump Issues Stark Warning, Then Clarifies Position
On Monday evening, Trump posted on social media urging “everyone to evacuate Tehran,” intensifying speculation that the U.S. might escalate its role in the conflict. The statement initially drove oil prices up by as much as 2%.
Shortly after, the White House confirmed that the U.S. remained in a defensive posture and would not take part directly in the hostilities. This clarification helped ease investor anxiety and prompted a pullback in crude prices.
Trump also mentioned that his administration was working toward a ceasefire, though conflicting messages emerged, as reports suggested Iran was interested in deescalation—an assertion Tehran officially denied.
The conflict entered its fifth day, with no clear signs of resolution. Iran continued launching missile attacks on Israel in retaliation for strikes that targeted nuclear facilities near Tehran.
Oil markets initially rallied following Israel’s attack on Friday, on fears that broader Middle East tensions could disrupt oil supplies. Iran, a major oil exporter and OPEC member, plays a key role in global energy markets.
Ceasefire Speculation and China Data Apply Pressure
On Monday, oil prices saw a steep pullback as talk of a potential Iran-Israel ceasefire took center stage, despite Tehran’s rejection of negotiations under ongoing attacks.
Market sentiment was also dampened by mixed economic signals from China. Industrial production figures for May missed expectations, while retail sales came in stronger—reflecting an uneven recovery in the world’s second-largest economy.
While geopolitical fears have driven recent oil gains, broader demand concerns persist, particularly due to ongoing trade tensions between the U.S. and China.
Additionally, rising production levels from OPEC countries have raised fears of a possible oversupply situation later this year, further clouding the outlook for crude prices.
