Oil prices rose sharply on Monday, supported by growing optimism that the U.S. and China are making headway in resolving their long-standing trade dispute. Brent crude approached $65 a barrel, while U.S. West Texas Intermediate (WTI) hovered near $62, extending last week's upward momentum.
Following two days of negotiations, officials from both nations reported “substantial progress,” signaling a potential breakthrough in trade relations between the world’s two largest oil consumers. While a joint statement is expected soon, traders are closely watching for specific details that could confirm a long-term easing of tariffs and a revival in global trade flows.
The upbeat mood helped crude recover from recent lows, with both benchmarks posting their first weekly gains since mid-April. Analysts note that improved trade relations could restore confidence in the global economic outlook and strengthen oil demand.
However, the rally remains restrained. OPEC and its allies, collectively known as OPEC+, are expected to ramp up output in the coming months, potentially increasing supply at a time when demand is still uncertain.
Geopolitical tensions are also influencing sentiment. U.S. and Iranian officials concluded another round of nuclear talks in Oman over the weekend, with further negotiations planned. A potential agreement could ease sanctions on Iranian oil exports, raising the possibility of additional supply entering the market.
In a separate development, the U.S. imposed sanctions on a third Chinese refinery, accusing it of violating restrictions on Iranian crude, further complicating diplomatic dynamics.
Despite the recent recovery in prices, crude futures remain down more than 20% from their January peaks. Analysts warn that without sustained improvements in trade, economic indicators, or geopolitical stability, the market may struggle to maintain its gains.