Investing.com-- Oil prices rose in Asian trading on Tuesday, recovering from a sharp 2% drop, as markets remained cautious amid global economic uncertainty driven by U.S. trade tariffs and President Trump’s efforts to overhaul the Federal Reserve.

As of 21:55 ET (01:55 GMT), Brent Oil Futures expiring in June rose 0.8% to $66.80 per barrel, while West Texas Intermediate (WTI) crude futures jumped 1% to $63.02 per barrel.

Both contracts had settled more than 2% lower on Monday after Iran and the U.S. agreed to commence expert-level discussions to design a framework for a potential nuclear deal.

Trump’s clash with Fed, tariff worries stir economic slowdown fears

White House economic advisor Kevin Hassett said on Friday that President Trump and his team were continuing to study whether they could fire Fed Chair Jerome Powell.

Trump on Monday reiterated his call for the Fed to reduce rates, saying the U.S. economy could slow down if the Fed does not cut interest rates immediately.

This comes after Powell said last week that the central bank was not inclined to cut interest rates in the near future, citing the possible inflationary pressures and economic uncertainties stemming from the new tariffs.

Market participants typically view a politically influenced Fed as a risk, as it could lead to less predictable monetary policy, something that directly affects commodities like oil through currency movements and economic growth expectations.

In parallel, Trump’s escalation of trade tariffs, particularly targeting China, has amplified fears of a global economic slowdown.

A slowdown in trade and manufacturing typically leads to reduced energy consumption, which in turn weighs on oil demand.

Markets assess US-Iran nuclear talks to gauge supply outlook

Oil prices were recently rebounding from a four-year low reached this month, but easing supply disruption concerns after US-Iran nuclear talks dented the sentiment.

The expert meetings between the U.S. and Iran are scheduled to begin in Oman on Wednesday, with a follow-up session planned for Saturday to assess progress.

Progress toward a U.S.-Iran nuclear deal raised expectations that Iranian oil could return to global markets, increasing supply.

Sentiment surrounding the crude market had already been weak after eight members of OPEC+, the group which includes the Organization of Petroleum Exporting Countries and allies led by Russia, had announced plans to accelerate production increases from May 1.

The cartel is set to boost output by 411,000 barrels per day, a faster pace than previously planned.