Oil prices increase following China’s announcement of its willingness to engage in trade discussions with the United States. Oil prices experienced an uptick in Asian trading as China’s signals of willingness to engage in U.S. trade discussions raised optimism for potential de-escalation. Brent crude increased to $62.51 a barrel, whereas U.S. WTI crude attained $59.62. The threat of sanctions on Iranian oil buyers issued by President Trump has contributed to the support of prices, heightening concerns regarding supply.
Oil prices advanced in the early hours of trading on Friday following China’s announcement of its willingness to engage in discussions with the United States, which has sparked optimism regarding a potential easing of tensions in the ongoing trade conflict between the two largest economies globally. Brent crude futures increased by 38 cents, representing a 0.6% rise, reaching $62.51 per barrel as of 0130 GMT. Meanwhile, U.S. West Texas Intermediate crude futures also saw an uptick of 38 cents, or 0.6%, bringing the price to $59.62 per barrel.
On Friday, China’s commerce ministry announced that the United States has recently initiated measures to engage in dialogue with Beijing by relaying information through pertinent channels. Fears that the escalating trade conflict may drive the global economy into recession and dampen oil demand, coinciding with the OPEC+ coalition’s plans to increase production, have significantly impacted oil prices in recent weeks. Nonetheless, the indications of a possible reduction in trade tensions between the United States and China, the largest importer of crude oil globally, bolstered sentiment regarding crude oil markets. Oil prices were supported by a warning from U.S. President Donald Trump regarding the potential imposition of secondary sanctions on purchasers of Iranian oil.
According to analysts at ANZ bank, the threat has heightened concerns regarding the potential for tighter crude oil supplies. Trump’s remarks came after a delay in U.S. discussions with Iran regarding its nuclear program. He had previously reinstated a “maximum pressure” campaign against Iran, which encompassed initiatives aimed at reducing the nation’s oil exports to zero, in order to hinder Tehran’s progress towards developing a nuclear weapon.
Oil prices experienced an uptick late in Thursday’s session, closing nearly 2% higher in response to Trump’s remarks. This increase offset some of the earlier losses observed during the week, which were driven by expectations of increased OPEC+ supply entering the market. On Wednesday, Reuters reported that Saudi Arabia, the de facto leader of OPEC+, has informed allies and industry experts of its reluctance to support oil prices through additional supply cuts. Several OPEC+ members are poised to propose that the group intensifies output increases in June for a second consecutive month, as reported earlier by Reuters. On May 5, eight OPEC+ nations are scheduled to convene to deliberate on a production strategy for June.