NEW YORK—Oil futures edged higher in volatile trade on May 6 as rising tensions between the United States and Iran buoyed prices, which earlier touched a one-month low after U.S. President Donald Trump said he may raise tariffs on Chinese goods.
Additional buying was sparked after WTI broke through $62 a barrel in early afternoon trade, said Bob Yawger, director of energy futures at Mizuho in New York.
Injecting risk premium into the market, the United States is deploying a carrier strike group and a bomber task force to the Middle East to send a clear message to Iran that any attack on U.S. interests or its allies will be met with “unrelenting force,” U.S. national security adviser John Bolton said on May 5.
“You’re seeing those increasing geopolitical tensions,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Elsewhere, top oil exporter Saudi Arabia raised its crude oil prices for June to its Asian and European customers, and cut prices to the United States, a signal that Riyadh is in no hurry to boost oil supply ahead of an OPEC meeting next month.
Also pressuring the market, Trump said on Twitter on May 5 that tariffs on $200 billion of goods would increase to 25 percent, reversing his February decision to keep them at 10 percent due to progress in trade talks.
Trump tweeted again, early on May 6 citing the trade deficit between the United States and China. “The United States has been losing, for many years, 600 to 800 Billion Dollars a year on Trade. With China, we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!” he tweeted.
Within the oil industry, there are signs of a further rise in output from the United States, where crude production has surged by more than 2 million barrels per day (bpd) since early 2018 to a record 12.3 million bpd.
The United States is now the world’s biggest oil producer, ahead of Russia and Saudi Arabia.
By Stephanie Kelly