Oil prices rise despite concerns over US tariffs, trade war risks

Oil prices rebounded on Monday despite lingering fears over a potential global trade war after US President Donald Trump's latest tariff plans, this time targeting steel and aluminium.

Brent crude futures were up 94 cents, or 1.3 per cent, at $75.60 a barrel by 1131 GMT. US West Texas Intermediate crude also added 1.3 per cent, rising 93 cents to $71.93.

Monday's gains could be down to bargain hunting after the market posted a third consecutive weekly decline last week, pressured by the concerns over global trade.

"It's tariff uncertainty which is the name of the game. This affects risk appetite in general and has spillover effects into oil," said Harry Tchilinguiran at Onyx Capital. "After last week's declines, some people may be buying into the dip."

Trump said he will announce on Monday 25 per cent tariffs on all steel and aluminium imports into the United States.

A week ago he announced tariffs on Canada, Mexico and China, but suspended those for the neighbouring countries the next day.

There are concerns that tariffs could dampen global economic growth and energy demand. But in light of Trump's temporary backdown last week, investors appeared to be shrugging off the steel and aluminium tariff threat for now, said IG analyst Tony Sycamore.

"The market has realised tariff headlines are likely to continue in the weeks and months ahead," he said, adding that there was an equal chance they could be walked back or even increased at some point in the near future.

"So perhaps investors are coming to the conclusion it's not the best course of action to react negatively to every headline."

China's retaliatory tariffs on some US exports are due to take effect on Monday, with no sign yet of progress in talks between Beijing and Washington.

Oil and gas traders are seeking waivers from Beijing for US crude and liquefied natural gas (LNG) imports.

Trump said on Sunday that the US is making progress with Russia to end the Ukraine war, but he declined to provide details about any communications with Russian President Vladimir Putin.

Sanctions imposed on Russian oil trade on January 10 disrupted Moscow's supplies to its top clients, China and India.

Washington also stepped up pressure on Iran last week, with the US Treasury imposing new sanctions on a few individuals and tankers that help to ship Iranian crude oil to China.

"These sanctions on Iran and Russia, they are biting. This is tightening the market," said SEB analyst Bjarne Schieldrop. Rising natural gas prices are also contributing to oil price gains by boosting demand for cheaper fuels, he added.

Brent crude is forecast to average $60 to $65 a barrel in the second half of 2025 because Trump will be persistent in his desire to lower energy prices and he will ultimately prove to be a bearish influence on the market, Citi analysts said.

(Reporting by Anna HirtensteinAdditional reporting by Florence TanEditing by Susan Fenton and David Goodman)