Rising oil prices following the easing of the trade war between Washington and Beijing.
Global oil markets witnessed a strong uptrend during trading on Monday, May 12, as prices surged by more than 2.5% following the announcement of a U.S.-Chinese agreement to reduce mutual tariffs, a significant step in easing trade tensions between the two economic giants.
Brent crude benchmark recorded a 2.6% increase to reach $65.59 per barrel, while West Texas Intermediate crude jumped by 2.8% to $62.77 per barrel. This rise continued the gains from the previous week, exceeding 4%, marking the first such increase since mid-April.
Washington and Beijing announced an agreement to reduce tariffs from 125% to 10% on most mutual goods, while maintaining a 20% U.S. tariff on Chinese imports related to fentanyl, bringing the total imposed tariffs on China to 30%. This agreement is seen as a positive sign for global trade recovery and increased oil demand.
Experts expressed cautious optimism about these developments, with Toshitaka Tazawa, an analyst at Fujitomi Securities, telling Reuters: "Optimism about constructive talks between the U.S. and China boosted morale, but the lack of clear details, along with OPEC+ plans to increase production, tempered the strength of the gains."
Despite this rise, concerns remain about an increase in oil supply following OPEC+'s decision to accelerate production increases during May and June. A Reuters survey showed a slight decrease in OPEC production in April despite these trends.
On the other hand, American and Iranian negotiators concluded indirect talks in Oman, confirming the continuation of negotiations in the future. Tehran remains committed to its uranium enrichment program, while any nuclear agreement could alleviate concerns about global oil supply.
Despite positive indicators for demand recovery, factors such as increased OPEC+ production and Iranian nuclear developments could limit the upward momentum of oil prices in the near future.
