Oil Prices Surge on Trade Talk Hopes

Oil prices experienced an increase on Friday following China’s announcement that it is open to discussing tariffs with the United States. This development has fueled optimism for a potential de-escalation in the trade dispute between the world’s two leading economies.

Brent crude futures saw a rise of 49 cents, or 0.8%, reaching $62.62 per barrel by 0446 GMT. Similarly, US West Texas Intermediate crude futures increased by 50 cents, also 0.8%, to $59.74 a barrel.

China’s Commerce Ministry communicated that Beijing is currently assessing a proposal from Washington to conduct negotiations aimed at resolving US President Donald Trump’s extensive tariffs. This signals a possible reduction in the trade tensions that have destabilized global markets.

Concerns have arisen in recent weeks that the broader trade conflict could potentially drive the global economy into a recession and negatively impact oil demand, particularly as the OPEC+ group prepares to increase output. These worries have placed significant downward pressure on oil prices.

Vandana Hari, the founder of Vanda Insights, an oil market analysis provider, commented, “If Washington acts on this, as I anticipate, it could significantly alter the pessimistic sentiment that has dominated markets for several weeks.”

Hari added, “While no one expects a completely smooth process, this is an encouraging step forward in resolving the deadlock that has been affecting markets.”

Oil prices also received support from Trump’s threat to impose secondary sanctions on entities purchasing Iranian oil.

Trump’s statement followed a delay in US discussions with Iran regarding its nuclear program. Previously, he had reinstated a “maximum pressure” strategy against Iran, which included efforts to eliminate the country’s oil exports to prevent Tehran from developing nuclear weapons.

Previous Day’s Movements

Oil prices had increased towards the end of Thursday’s trading session, settling almost 2% higher due to Trump’s remarks. This recovery offset some of the losses experienced earlier in the week, which were driven by expectations of increased OPEC+ supply entering the market.

Reuters reported that Saudi Arabia, the leading member of OPEC+, had informed allies and industry experts of its reluctance to further support oil prices through additional supply cuts.

Several OPEC+ members are expected to propose that the group accelerate output increases in June for the second consecutive month.

Eight OPEC+ countries are scheduled to meet on May 5 to determine the output plan for June.

Fitch’s BMI research unit stated in a note: “With non-OPEC+ supply growing strongly and global demand growth facing structural decline, we do not see a natural point for these barrels to re-enter the market. Ultimately, the group will likely have to accept some price decreases, regardless of when it decides to reverse its cuts.”