Oil Prices Rebound as Investors Cover Shorts, but Tariff War and Monetary Policy Fears Still Weigh on Market

Oil Prices Rebound as Investors Cover Shorts, but Tariff War and Monetary Policy Fears Still Weigh on Market

April 22, 2025 — Crude oil prices edged higher on Tuesday after heavy losses in the previous session, as investors engaged in short-covering. However, concerns over U.S. tariff policies and ongoing uncertainty around monetary policy continue to weigh on the broader outlook for oil demand.

- Brent crude rose by 42 cents (0.6%) to $66.68 per barrel as of 06:20 GMT
- U.S. WTI crude (May delivery) gained 45 cents (0.7%) to $63.53 per barrel
- More actively traded WTI June contract rose 0.7% to $62.86 per barrel

On Monday, oil prices had dropped over 2% following reports of progress in U.S.-Iran nuclear talks, which eased concerns over global supply disruptions.
“Some short-covering has emerged after Monday’s sharp sell-off,” said Hiroyuki Kikukawa, Chief Strategist at Nissan Securities Investment.

Tariff and Rate Uncertainty Still Weighing on the Market
Kikukawa noted that fears of a potential recession triggered by escalating trade tensions remain a key concern. He projected WTI crude would likely trade within the $55–$65 range in the short term.

Meanwhile, President Donald Trump escalated pressure on the Federal Reserve, again criticizing Chair Jerome Powell and calling for immediate interest rate cuts. The remarks sparked renewed concerns over Fed independence, sending U.S. equity markets sharply lower and dragging the dollar index to a three-year low.

Supply Pressures Ease Amid Progress in Iran Nuclear Talks
The recent agreement between Washington and Tehran to outline a preliminary nuclear framework helped calm fears over supply shortages.
“We see declining risk to Iran’s crude exports,” said Vivek Dhar, Analyst at Commonwealth Bank of Australia, noting the possibility of sanctions relief.

U.S. Inventory Outlook
A Reuters survey on Monday indicated that U.S. crude and gasoline stockpiles likely fell last week, while distillate inventories may have risen. Official data from the API and EIA are expected later this week.

Summary
While oil prices saw a modest recovery driven by short-term buying, broader market sentiment remains fragile. Trade tensions, interest rate uncertainty, and geopolitical developments continue to create volatility, with investors closely monitoring updates from the Federal Reserve and White House in the coming days.