Oil prices recovered some ground on Monday following a decline to five-month lows in the prior session, as investors speculated that potential discussions between the presidents of the U.S. and China might alleviate trade tensions between the two largest economies and oil consumers. Brent crude futures increased by 87 cents, representing a 1.39% rise, reaching $63.60 a barrel by 0045, following a decline of 3.82% on Friday, marking the lowest level since May 7. U.S. West Texas Intermediate crude was priced at $59.77 a barrel, reflecting an increase of 87 cents, or 1.48%, after experiencing a 4.24% decline that marked its lowest level since May 7.

U.S. Last week, trade tensions between China and the United States escalated as China broadened its export controls on rare earth materials. In response, U.S. President Donald Trump announced on Friday the imposition of 100% tariffs on exports from China destined for the U.S., in addition to implementing new export controls on “any and all critical software” by November 1. The developments occur in anticipation of a possible meeting between Trump and Xi during the Asia-Pacific Economic Cooperation forum in South Korea, an event that U.S. Trade Representative Jamison Greer indicated may still take place later this month.

“The pivotal inquiry for markets is whether these measures will be fully enacted, potentially causing significant disruptions to global supply chains and particularly impacting high-tech manufacturing, or if they will merely serve as tactics to enhance negotiating power in advance of bilateral discussions during the APEC meeting in South Korea later this month,” noted analysts. “The most likely scenario seems to be that both sides pull back on the most aggressive policies and that talks lead to a further – and possibly indefinite – extension of the tariff escalation pause reached in May,” they stated, although there remains the risk of trade tensions escalating, which may result in higher tariffs or more serious export restrictions, at least temporarily.

In March and April, oil prices experienced a significant decline amid escalating trade tensions between the two nations. In the Middle East, Trump announced on Sunday that the Gaza war has concluded as he travels to Israel in anticipation of the expected release of Israeli hostages and Palestinian prisoners, a development tied to the delicate ceasefire he facilitated. Oil experiences a 1% recovery following significant declines attributed to US-China tensions.