Oil prices experienced a notable increase in early Asian trading hours today, Monday, buoyed by the announcement of a framework for a trade agreement between the United States and China. This development has alleviated concerns that tariffs and restrictions on exports between the world’s two largest oil consumers could negatively impact global economic growth.
Brent crude futures saw a rise of 46 cents, or 0.7 percent, reaching $66.40 per barrel. Similarly, West Texas Intermediate (WTI) crude futures also increased by 46 cents, or 0.75 percent, to $61.96 a barrel. These gains follow substantial increases in the previous week, with Brent and WTI rising by 8.9 and 7.7 percent respectively.
The positive market reaction stems from comments made by US Treasury Secretary Scott Bisent yesterday, Sunday. He confirmed that senior economic officials from both China and the United States had reached a “very substantial framework” for a trade deal in Kuala Lumpur. This progress paves the way for further discussions on trade cooperation between President Donald Trump and his Chinese counterpart, Xi Jinping, later this week.
Analysts suggest that the potential reduction in trade tensions between the US and China is a significant factor driving the price surge. A stable trade environment is expected to support global economic activity, leading to increased demand for oil. However, some caution that the agreement is still preliminary and further negotiations are needed to finalize the details.
The energy market will continue to closely monitor developments in the US-China trade negotiations, as well as other geopolitical factors, which could influence oil prices in the coming days and weeks. The outcome of the discussions between Presidents Trump and Xi will be particularly crucial in determining the long-term trajectory of oil prices.
