Oil recovered from early declines after President Donald Trump threatened to escalate his trade war with China but also dispatched warships to the Middle East in a warning to Iran.
Futures in New York climbed 0.5% as Trump’s national security adviser announced an aircraft carrier strike group and bomber force were on their way to the Middle East. That erased a steep plunge earlier in the session after the president’s tweets suggested U.S.-China trade talks were in jeopardy, stoking fears about the global economy.
U.S. crude has retreated around 6% since hitting a six-month high in late April amid signs global markets may not be as tight as feared. While the possibility that the world’s two largest economies won’t reach a trade truce undermined prices, the decision to dispatch forces to the heart of global crude production posed a new risk to supplies, after Trump tightened sanctions on Iran last week.