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Macro Risks Undermine Any Near-Term Rebound
The modest rebound comes as equity markets stabilize, but upside in crude remains capped by intensifying macro pressure. U.S.-China trade tensions escalated sharply following President Trump’s call for “reciprocal tariffs” on all imports.
Beijing responded with defiance, warning it would “fight to the end” against U.S. pressure. The threat of a prolonged trade war between the world’s top two economies has amplified fears of a global recession—one that could significantly dent oil demand growth.
EU officials added to the risk complex by announcing potential 25% counter-tariffs on U.S. goods, further complicating the global trade picture. ING’s Warren Patterson described Tuesday’s bounce as a “relief rally” with little conviction, pointing out that the market had already priced in a large portion of expected demand destruction.
U.S.-Iran Headlines Add Geopolitical Uncertainty
Geopolitics added another layer of complexity. President Trump hinted at direct nuclear talks with Iran, though Tehran downplayed this, saying any dialogue would remain indirect.
According to RBC’s Helima Croft, a successful diplomatic breakthrough could bring more Iranian barrels to market, while a breakdown risks sparking military tension—either outcome could meaningfully sway supply expectations.
Inventory Build, Goldman Forecasts Add Bearish Pressure
Fundamentals also leaned bearish, with a Reuters poll projecting a 1.6 million barrel build in U.S. crude and distillate stocks. Inventory data from API and the EIA is due this week and will be closely scrutinized for demand signals.
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