Mubasher: Oil futures traded higher on Tuesday as the US-Iran tensions escalated, while market participants expected that the Organization of the Petroleum Exporting Countries (OPEC) will sustain its supply restraints this year, according to Reuters.

However, gains were capped by worries that a protracted trade conflict between the US and China will curtail global economic growth.

At 7:43 am GMT, US Nymex crude futures rose by 0.36% to $63.33 per barrel (pb), while global benchmark Brent futures dipped by 0.13% to $71.88 pb.

After a rocket attack in the heavily fortified “Green Zone” in the Iraqi capital, President Donald Trump threatened Iran with “great force” if it attacked the US interests in the Middle East. The threat came amid the White House’s suspicions that the assault was staged by Iran-related militia.

In response, Iran vowed that it will stand in the face of the US pressure, declining further negotiations under the current circumstances.

The tensed situation in the region came amid an already tight market as OPEC members and their allied producers, including Russia, have been scaling back supply since the beginning of this year, to prevent a build in inventories and price crash.

“Escalating tensions between the US and Iran, in addition to signs that OPEC will continue its production cut, drove oil higher,” futures brokerage London Capital Group research head Jasper Lawler was quoted by Reuters.

At the other end of the spectrum, financial markets were pressured amid worries that the world’s two biggest economies have been embroiled in a prolonged, acrimonious, and costly trade conflict, threatening a broad global slowdown.

This was already indicated in Singapore’s lowest quarterly growth rate in a decade, while the growth of Thailand, a major Asian emerging market, came in at a multi-year low.