Oil prices rebound despite Sino-US trade tension

Oil prices rebounded on Wednesday in Asia as traders weighed US sanctions against Iran and news on the Sino-U.S. trade front.

US Crude Oil WTI Futures were up 0.8% to $61.88 by 1:19 AM ET (05:19 GMT). International Brent Oil Futures gained 0.6% to $70.26.

Traders are closely monitoring the situation in Iran this week as the US tightens sanctions on the country’s oil exports, saying on Monday it was boosting its military presence in the Middle East.

Iran has threatened “reciprocal actions”, which could mean restarting some of its nuclear programs.

The US re-imposed sanctions on Iran in November in 2018, demanding all countries stop importing oil from the country.

The sanctions have already halved Iranian crude oil exports over the past year to less than 1 million barrels per day, and shipments to customers may drop to as low as 500,000 barrels per day in May as sanctions tighten, analysts say.

Regardless of the gains today, oil prices were under pressure earlier this week amid fears that trade negotiations between China and the US could break down after US President Donald Trump announced plans to hike tariffs already in place on $200 billion of Chinese imports.

Chinese Vice Premier Liu He is travelling to Washington to resume trade negotiations with the US on Thursday and Friday, according to a statement on the Chinese Ministry of Commerce website. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will attend the talks.

Analysts said chances of a trade deal being reached this week are slim as the announcement by the US that it is raising the tariffs on Chinese imports have likely prolonged the time required for both sides to reach a consensus.