Investing.com– Oil prices fell in early Asian trade on Tuesday, extending losses from the prior session as the prospect of an Israel-Lebanon ceasefire saw traders pricing in a smaller risk premium for crude.

A spike in the dollar, after U.S. president-elect Donald Trump threatened to impose import tariffs on China, Canada, and Mexico, also pressured oil prices. 

expiring in January fell 0.3% to $72.80 a barrel, while fell 0.3% to $68.33 a barrel by 20:14 ET (01:14 GMT). 

Oil pressured by reports Israel-Hezbollah ceasefire is close 

Oil prices tumbled on Monday after several media reports said Israel and Lebanese militant group Hezbollah were close to reaching a U.S.-brokered ceasefire deal.

U.S. President Joe Biden and French President Emmanuel Macron are set to announce the ceasefire “imminently,” Reuters reported.

A ceasefire between the two marks a major de-escalation in the long-running Middle East conflict, and lessens the risk of oil supply disruptions stemming from the conflict.

Reports also suggested that Biden was pushing for a ceasefire in Gaza. 

Still, reports of the ceasefire were undermined by both Israel and Hezbollah launching strikes against each other over the weekend. 

Oil’s risk premium also still remained in play following an escalation in Russia-Ukraine tensions over the past week, after Moscow threatened nuclear retaliation for Kyiv’s use of Western-made long-range missiles in the war. 

Dollar surges after Trump tariff threat 

The rose sharply on Tuesday, pressuring oil prices after Trump threatened to impose a 10% trade tariff on China over the alleged inflow of illicit drugs into the U.S.

Trump also threatened a 25% import tariff on Mexico and Canada over claims of illegal immigrants entering the U.S. through the two countries. 

The dollar shot up on the prospect of more U.S. protectionist policies, coming back in sight of a two-year high and pressuring crude prices. A stronger dollar makes oil more expensive for international buyers, denting demand.

The prospect of higher trade tariffs on China, which is the world’s biggest oil importer, also weighed on oil, given that they herald more economic pressure on Beijing. 

Beijing could also impose retaliatory tariffs against the U.S., ramping up a trade war between the world’s two largest economies and potentially disrupting global trade. 

By Paul Carsten

LONDON (Reuters) -Oil prices rose on Tuesday, steadying after falling more than $2 a barrel in the previous session on reports of a potential ceasefire between Israel and Lebanon’s Hezbollah.

futures were up 53 cents, or 0.7%, at $73.54 a barrel as of 1231 GMT. U.S. West Texas Intermediate crude futures were at $69.46 a barrel, up 52 cents, or 0.75%.

Prices fell sharply on Monday after multiple reports that Israel and Lebanon had agreed to the terms of a ceasefire in the Israel-Hezbollah conflict. A senior Israeli official said Israel looks set to approve a U.S. plan for a ceasefire on Tuesday.

Market reaction to the ceasefire news was “over the top” as the broader Middle East conflict has “never actually disrupted supplies significantly to induce war premiums” this year, said senior market analyst Priyanka Sachdeva at Phillip Nova.

A ceasefire in Lebanon would reduce odds of the incoming U.S. administration imposing more sanctions on Iranian crude, said ANZ analysts.

Iran supports Hezbollah and is an OPEC member, producing around 3.2 million barrels per day.

Elsewhere, OPEC+ may consider at its next meeting on Sunday leaving its current oil output cuts in place from Jan. 1. The producer group is already postponing hikes amid global demand worries.

The International Energy Agency expects plentiful oil supplies this year and next unless a major geopolitical escalation occurs, IEA Executive Director Fatih Birol said on Tuesday.

On Monday, U.S. President-elect Donald Trump said he would impose a 25% tariff on all products coming into the U.S. from Mexico and Canada. It was unclear whether this would include .

The vast majority of Canada’s 4 million bpd of crude exports go to the U.S. Analysts have said it is unlikely Trump would impose tariffs on Canadian oil, which cannot be easily replaced since it differs from grades that the U.S. produces.

“Contrary to today’s sell-off in risk assets, I think the tariff announcements are actually risk-positive because they are lower than consensus expectations,” said market analyst Tony Sycamore at IG.

Trump separately outlined “an additional 10% tariff, above any additional tariffs” on imports from China. It was not entirely clear what this would mean for China as he has previously pledged to slap tariffs on Chinese imports in excess of 60%.

Investing.com– Gold prices rose slightly in Asian trade on Tuesday as threats of more trade tariffs from president-elect Donald Trump buoyed demand for safe havens, although a spike in the dollar limited any major metal gains. 

The yellow metal was nursing steep losses from the prior session after multiple reports suggested that a ceasefire between Israel and Lebanon was close, which dented safe haven demand. 

rose 0.1% to $2,628.69 an ounce, while expiring in December rose 0.4% to $2,653.75 an ounce by 23:24 ET (04:24 GMT). 

Trump tariff threat buoys haven demand

Trump threatened to impose a 10% import tariff on China, and a 25% import on Canada and Mexico, claiming the measures were to stem the alleged inflow of illegal immigrants and illicit drugs through the U.S. border countries. 

His threats ramped up investor concerns over a renewed global trade war, especially with China. Trump had campaigned on promises of strict trade measures against Beijing.

China decried the threat, with the possibility of retaliation from Beijing also dampening risk appetite. 

Still, bigger gains in gold were held back as the dollar surged after Trump’s announcement. The greenback came back in sight of a two-year high hit last week. 

Other precious metals were also mixed, with falling 0.1% to $943.65 an ounce, while rose 0.5% to $30.823. 

Among industrial metals, copper prices retreated on the prospect of more economic headwinds for top importer China. Benchmark on the London Metal Exchange fell 0.3% to $9,026.50 a ton, while expiring in March fell 0.4% to $4.1453 a pound. 

Gold skittish as M.East tensions ease

Safe haven for gold was limited by bets on easing tensions between Israel and Lebanese militant group Hezbollah, with multiple reports suggesting that a ceasefire was imminent.

Heightened tensions in the Middle East had been a key driver of gold gains earlier this year, especially after Israel and Iran attacked each other.

Gold was sitting on some gains from last week after increased tensions between Russia and Ukraine spurred haven demand. Moscow threatened nuclear retaliation for Kyiv’s use of Western-made, long-range missiles.