Oil prices rise as investors cover short positions

Oil prices climbed higher in early trade on Tuesday. According to Reuters, investors took advantage of the previous day's price drop to cover short positions. However, concerns over a potential US recession driven by President Donald Trump’s tariff policies continue to weigh on the market. A worsening economic outlook could further dampen fuel demand.

Brent prices rose 0.8% on Tuesday, with WTI posting similar gains. Both benchmarks dropped more than 2% on Monday as US-Iran talks showed signs of progress.

Meanwhile, Trump's calls for interest rate cuts have sparked fresh concerns about US economic stability. His sharp criticism of Federal Reserve Chair Jerome Powell has raised questions about the central bank's independence. This has sent US stock indices lower and weakened the dollar. According to Hiroyuki Kikukawa of Nissan Securities Investment, such monetary policy uncertainty could negatively impact financial markets and oil demand.