Oil Prices Rise as US-China Trade Talks Show Signs of Progress

Oil prices climbed on Monday following encouraging signs from weekend trade negotiations between the United States and China, the world’s two largest consumers of crude. The positive developments boosted market sentiment, raising hopes that a resolution to the long-running trade dispute may be within reach.

Brent crude futures were up 43 cents, or 0.67%, reaching $64.34 a barrel by 8:00 a.m. Saudi time. U.S. West Texas Intermediate (WTI) crude also saw gains, rising 48 cents, or 0.79%, to $61.50 a barrel. The uptick follows a strong performance last week, where both benchmarks rose more than $1 on Friday and recorded weekly gains of over 4%—their first since mid-April.

The rally was driven in part by the tone of optimism following the latest round of U.S.-China trade talks. While concrete details were not disclosed, both sides emphasized progress. White House officials described the weekend discussions as resulting in a “deal” to reduce the U.S. trade deficit, while Chinese authorities cited “important consensus” between the negotiating teams. A joint statement was expected on Monday.

Improved trade relations between the two economic giants are seen as a potential catalyst for increased crude demand, as easing tariffs could restore cross-border commerce and industrial activity.

“Optimism over constructive U.S.-China talks supported sentiment, but limited details and OPEC’s plan to raise output capped gains,” said Toshitaka Tazawa, an analyst at Fujitomi Securities. He pointed to anticipated production increases by OPEC and its allies—collectively known as OPEC+—in May and June, which could temper further price rises.

Despite the planned output hikes, a Reuters survey indicated that OPEC’s oil production actually declined slightly in April, adding a layer of uncertainty to supply expectations.

Meanwhile, talks between U.S. and Iranian officials concluded in Oman without resolution but with plans for further negotiations. Tehran continues to insist on its right to enrich uranium, casting doubt on the immediate prospects for reviving the 2015 nuclear agreement. A successful deal could potentially bring more Iranian oil to the global market, easing supply concerns and putting downward pressure on prices.

Adding to the complex outlook, data from Baker Hughes revealed that U.S. energy firms reduced the number of active oil and gas rigs last week to their lowest count since January, suggesting potential softening in domestic production growth.

With geopolitical tensions and production decisions in flux, oil markets remain highly sensitive to developments on both the diplomatic and industrial fronts.