ISLAMABAD (PEN) : Oil prices edged higher on Tuesday amid growing anticipation over ongoing US-China trade negotiations, which could ease tensions and boost global fuel demand.
Oil Prices Gain Amid Trade Talks
By 0330 GMT, Brent crude futures increased by 28 cents, or 0.4%, to \$67.32 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude rose 23 cents, or 0.4%, reaching \$65.52 a barrel.
The previous day saw Brent touch \$67.19, its highest level since April 28, driven by optimism around a potential trade deal between the two economic giants. The talks, taking place for a second day in London, focus on resolving issues extending beyond tariffs to include rare earth export restrictions, which risk disrupting global supply chains and slowing economic growth.
Factors Influencing Market Sentiment
Goldman Sachs analysts noted that oil prices have rebounded as concerns over demand softened, supported by the trade discussions and a positive US jobs report. Supply risks in North America, notably wildfires in Canada, have also contributed to market tightening.
President Donald Trump commented Monday that the talks were progressing well, stating he was “only getting good reports” from his team in London. A successful US-China trade agreement could bolster the global economic outlook and enhance demand for commodities like oil.
Additional Market Developments
In other news, Iran, the third-largest OPEC oil producer, plans to submit a counter-proposal regarding the nuclear deal to the US, responding to what it calls an “unacceptable” offer. The disagreement over Iran’s uranium enrichment continues to strain negotiations. Should US sanctions on Iran ease, increased Iranian oil exports could exert downward pressure on global crude prices.
OPEC’s output in May showed an overall rise, according to a Reuters survey, though Iraq produced below its target to offset earlier overproduction. Saudi Arabia and the United Arab Emirates also increased output modestly, below permitted levels.
The OPEC+ coalition, comprising OPEC members and allies like Russia and responsible for about half of global oil supply, is advancing its plans to roll back recent production cuts.
Daniel Hynes, senior commodity strategist at ANZ, warned, “The prospect of further hikes in OPEC supply continues to hang over the market.” He added, “A permanent shift to a market-driven strategy (in OPEC) would push the oil market into a sizeable surplus in H2 2025 and almost surely lead to lower oil prices.”
