Oil prices rebounded slightly from big falls in recent sessions, but Brent crude remained near seven-month lows around $60 a barrel due to escalating trade tensions between China and the US.
Brent prices have lost more than 9% in the past week, with US President Donald Trump vowing to impose new tariffs on Chinese imports and China making further moves against US agricultural cargoes.
The US had also responded to a decline in China’s yuan by branding the country a currency manipulator, pushing China to accuse the US of causing chaos in financial markets.
International benchmark Brent futures were up 54 cents at $60.35 a barrel in London, having dipped earlier in the session to their lowest since mid-January.
“This morning’s slight price recovery is hardly worthy of mention. Concerns about demand and the escalating trade conflict are still keeping the oil market in a stranglehold,” said Commerzbank analyst Carsten Fritsch.
“As far as the oil market is concerned, there are two key questions,” he said, including why should China carry on buying US crude oil and why should China continue to adhere to the US sanctions when it comes to buying Iranian oil.
Brent crude fell more than 3% at the start of the week as traders worried the dispute between the world’s two biggest oil buyers would dent demand, helping to prompt the latest session’s short-covering.
“It’s difficult for oil to hold (up) when you have such moves in equities,” said Petromatrix analyst Olivier Jakob.
On the supply side, Iran has threatened to block all energy exports out of the Strait of Hormuz, through which a fifth of global oil traffic passes, if it is unable to sell oil as promised by a 2015 nuclear deal in exchange for curbing uranium enrichment.
Britain on Monday joined the US in a maritime security mission in the Gulf to protect merchant vessels after Iran seized a British-flagged vessel.
Meanwhile, Mr Trump imposed further sanctions on Venezuela, freezing the government’s assets in the US and adding immigration restrictions in a move aimed at stepping up pressure on the government of Nicolas Maduro.
Property belonging to the Venezuelan government “may not be transferred, paid, exported, withdrawn, or otherwise dealt in”, he said in an executive order.