synopsis

However, IG Market Strategist Yeap Jun Rong expects crude oil prices to inch lower if the U.S. and Iran strike a nuclear deal.

Even as fears of recession led by Trump’s tariff wars continue to spark anxiety among investors, crude oil prices staged a recovery on Tuesday morning after declining the previous day.

West Texas Intermediate crude futures traded at $63.34 at the time of writing, up nearly 1.5% or $0.92 from Monday’s closing price.

Brent crude futures traded at $67.04, up 1.08%.

According to a Reuters report, the demand outlook for crude oil remains “solid,” according to UBS analyst Giovanni Staunovo.

"The price drop on Monday looked a bit excessive in my view, considering that oil demand remains solid, so we might have some reversal today," said Staunovo.

A preliminary Reuters poll showed that U.S. stockpiles of crude oil declined last week.

The U.S. and Iran have also reportedly taken one step further towards negotiating a nuclear deal.

Both the U.S. and Iran have tasked experts with creating a framework for a potential nuclear deal following “progress” in bilateral talks.

A nuclear deal would alleviate pressure on Iran, allowing its oil exports to occur more freely. 

The country was the third-largest producer of crude oil among OPEC nations in 2023, according to data from the U.S. Energy Information Administration.

IG Market Strategist Yeap Jun Rong reportedly expects crude oil prices to inch lower if the U.S. and Iran strike a nuclear deal.

"The broader trend remains tilted to the downside, as investors may struggle to find conviction in an improving supply-demand outlook, especially amid the drag from tariffs on global growth and rising supplies from OPEC+," Rong told Reuters.

However, if Trump’s policies trigger a recession in the U.S., it could have an impact on the demand scenario in the country, and there could be repercussions for the rest of the world.

Amid the market uncertainty, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, gained 1.1% on Tuesday.

The United States Oil Fund ETF (USO) gained 0.50% at the time of writing, while the ProShares Ultra Bloomberg Crude Oil ETF (UCO) was up 1.10%.

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