By Katya Golubkova TOKYO (Reuters) - Oil prices retreated on Tuesday after U.S. President Donald Trump agreed to hold off imposing steep tariffs on Mexico and Canada, the two biggest foreign oil
Oil Prices Mixed as Trump Intensifies Iran Sanctions and Tariff Tensions
By Georgina McCartney
HOUSTON (Reuters) -Oil prices diverged at settlement on Tuesday amid tariff drama between Washington and Beijing, and after U.S. President Donald Trump restored his "maximum pressure" campaign on Iran, in a bid to drive Iranian oil exports to zero, per a U.S. official.
Trump signed the presidential memorandum ahead of his meeting with Israeli Prime Minister Benjamin Netanyahu, ordering the U.S. Treasury secretary to impose "maximum economic pressure" on Iran, including sanctions and enforcement mechanisms.
U.S. West Texas Intermediate crude settled down 46 cents, or 0.63%, at $72.70 a barrel.
Global benchmark Brent crude futures settled up 24 cents, or 0.32%, to $76.20.
Oil came under pressure early as new 10% U.S. tariffs on Chinese imports took effect on Tuesday, spurring retaliatory tariffs by Beijing. At its session low, U.S. crude was down more than 3%, the lowest since late December.
Trump had driven Iran's oil exports to near zero during his first term after reimposing sanctions. They rose under former President Joe Biden's tenure as Iran succeeded in evading sanctions.
Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries, extracts about 3.3 million barrels of oil per day, or around 3% of global output.
"The reason why oil was down near the lower end of the trading range was the China retaliation, and it went back up because of the 'maximum pressure' on Iran," said Phil Flynn, analyst at Price Futures Group.
TARIFF DRAMA
Traders had been eyeing efforts to schedule a call between Trump and Chinese President Xi Jinping, but the U.S. president said on Tuesday he was in no hurry to speak to his Chinese counterpart.
Trump said "that’s fine" when asked about China's decision to issue retaliatory tariffs on U.S. imports.
Earlier, Trump trade adviser Peter Navarro had said the two leaders would speak, suggesting to investors there was scope for China to receive a temporary reprieve as Trump granted to Mexico and Canada on Monday.
"Oil was down on the China retaliation, I think it's the expected Trump-Xi call that brought us back up, and we kind of know how those go now, in terms of walking this all back," said John Kilduff, a partner at Again Capital in New York.
On Monday, Trump suspended his threat of steep tariffs on Mexico and Canada, agreeing to a 30-day pause in return for concessions on border and crime enforcement.
Ongoing trade tensions between the U.S. and China may dampen demand for oil, further pressuring prices.
"The tit-for-tat measures out from China may not stop at just the 10% tariffs on crude oil from the U.S., which can also see a deliberate attempt to weaken the yuan if the U.S. fires back with more tariffs on China exports to the U.S.," said Kelvin Wong, senior market analyst at OANDA.
"Overall such actions are likely to give rise to a stronger U.S. dollar that in turn weakens ... oil prices, given that OPEC+ members are still on track to increase oil supply gradually from April."
China's 2024 crude oil imports from the U.S. accounted for 1.7% of its total crude imports, customs data shows.
"The Chinese are smart targeting crude oil and liquefied natural gas, because that's effectively going to knock them out of the U.S. market as you're adding $5-$7 a barrel, depending on pricing and that's just not competitive," said Kilduff.
Meanwhile, investors are awaiting U.S. oil stockpile data from the American Petroleum Institute.
(Reporting by Georgina McCartney in Houston, Katya Golubkova in Tokyo and Trixie Yap in Singapore and Arunima Kumar in Bengaluru; Additional reporting by Florence Tan and Siyi LiuEditing by David Goodman, Kirsten Donovan, David Gregorio and Rod Nickel)
