Investing.com - Oil prices were pressured lower on Tuesday amid concerns that escalating trade tensions between the U.S. and China could hit the global economy, depressing the outlook for fuel consumption.
U.S. crude prices were down 1.0% to trade at $61.66 by 07:50 AM ET (1:50 GMT), off 59 cents from their previous settlement.
London traded Brent crude futures were down 1.2% to $70.39, down 85 cents from their last close.
Market sentiment was hit by fears that trade negotiations between the world’s two largest economies could break down after U.S. President Donald Trump announced plans to hike tariffs already in place on $200 billion of Chinese imports, as well as levying new ones on hundreds of billions of dollars' worth of other imports.
Tanker brokerage Eastport said in a note that "worsening trade friction between Washington and Beijing poses a downside risk to our forecasts" for petroleum products.
Market participants also remained on edge as the U.S. tightens sanctions on Iranian 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 program.
The U.S. sanctions have already halved Iranian crude oil exports over the past year to below 1 million barrels per day (bpd), and shipments to customers may drop to as low as 500,000 bpd in May as sanctions tighten, analysts say.
Beyond Iran, Washington has also placed sanctions on the Venezuelan government under President Nicolas Maduro, further disrupting supplies from a country already crippled by economic mismanagement.
Goldman Sachs said on Tuesday that "the recent Brent pull-back has taken prices too low in the face of tight fundamentals and growing supply risks, just as refiners come back from extended spring turnarounds."
Goldman said it expects a near-term Brent rebound, but added that it may be short-lived. "Beyond the next couple months ... all these supply and demand cross-currents will dissipate to bring a balanced global oil market, once new (U.S.) Permian transport capacity is online and core-OPEC ramps up."
Goldman said the international Brent blend would average only $65.50 per barrel, some 7% below current levels.
Bank of America Merrill Lynch was slightly more bullish, saying it expected Saudi Arabia "to bring back oil production slowly as Iranian barrels exit the market," and adding that overall it saw Brent crude oil prices having a floor at $70 per barrel in current market conditions.
--Reuters contributed to this report