May 21 (UPI) -- Oil prices moved slightly higher in early Monday trading on easing U.S.-Chinese trade tensions, but could rally higher on heightened U.S.-Iranian tensions.
After a weekend of trade work, U.S. Treasury Secretary Steven Mnuchin said tensions between the two largest economies in the world were easing after tit-for-tat threats put billions of dollars in trade at risk. By Monday, U.S. President Donald Trump said the Chinese economy has agreed to take on "massive" amounts for farm and agricultural products, offering a life line to his base of supporters in U.S. farm states.
"On China, barriers and tariffs to come down for first time," Trump said through his Twitter account.
Crude oil prices lost nearly 2 percent on April 4 when China threatened $50 billion worth of U.S. imports with stiff tariffs. With the tensions easing, the market is doing the opposite.
Markets are expected to remain volatile as traders digest the latest U.S. position on the Iranian nuclear deal. U.S. Secretary of State Mike Pompeo laid out a new U.S. vision on Iranian policy during a Monday morning address at the conservative Heritage Foundation.
With European governments working to save the U.N.-backed agreement, which Washington has since abandoned, Pompeo vowed "unprecedented" financial pressure on Iran.
"No more wealth creation for Iranian kleptocrats," he said.
The evolving U.S. position followed a weekend meeting between Iranian and European energy officials. After introducing blocking statutes last week, European Climate Action and Energy Commissioner Miguel Arias Cañete said both sides would strengthen ties "at all levels."
Trita Parsi, the founder and president of the National Iranian American Council, which has advocated for the Iranian agreement, told UPI the U.S. decision to ramp up the pressure on Iran has questionable ends.
"While the official line is to gain leverage before returning to the negotiation table, the reality is that even if their intent is a renegotiation, the dynamics between the United States and Iran will cause this to end up in a military confrontation," he said.
War with Iran could have global consequences.
Elsewhere, Venezuelan President Nicolas Maduro secured another six-year term in elections that were widely boycotted and condemned. Sanctions pressures on Caracas have already pushed oil production from the members of the Organization of Petroleum Exporting Countries to historic lows.
Concerns about the fate of the loss of Iranian barrels from an already-tight market and lingering declines from Venezuela have been supportive of crude oil prices for much of the year.