Oil prices climb on trade hopes

[WORLD] Oil prices experienced a modest uptick on Monday, driven by renewed optimism surrounding the potential easing of U.S.-China trade tensions and expectations of supply constraints from OPEC+. Brent crude futures rose to $66.96 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed to $63.11 per barrel, marking a third consecutive session of gains.

Key Factors Influencing Oil Market Dynamics

U.S.-China Trade Developments: Recent statements from U.S. Treasury Secretary Scott Bessent indicated that high tariffs between the U.S. and China are unsustainable, suggesting that reductions may be necessary for negotiations to progress. Although President Trump has not unilaterally cut tariffs, these remarks have fueled optimism about a potential resolution to the ongoing trade dispute.

In addition, Beijing recently signaled its willingness to return to the negotiating table under more flexible conditions, according to sources close to the Chinese Ministry of Commerce. Analysts say these overtures, though tentative, are encouraging signs that the two largest economies may seek mutual concessions to de-escalate trade frictions that have weighed heavily on global markets, including commodities.

OPEC+ Supply Considerations: Market participants are closely monitoring the upcoming OPEC+ meeting scheduled for May 5, where discussions about increasing oil output may take place. Such a move could impact global oil supply and influence price trajectories.

In the lead-up to the meeting, Saudi Arabia and Russia—two of the largest producers within the OPEC+ alliance—have issued diverging signals. While Saudi officials favor a conservative approach to output hikes, citing fragile global demand, Russian energy ministers have expressed interest in loosening production caps to maintain market share. This internal division has added another layer of uncertainty to oil price forecasts.

Meanwhile, U.S. shale producers are taking a wait-and-see approach. Recent data from the U.S. Energy Information Administration (EIA) showed a slight increase in domestic crude inventories, suggesting that supply growth may be slowing amid capital discipline and cost inflation. This could provide some support to global prices if OPEC+ decides to maintain or cut output.

Geopolitical Factors: Tensions in the Middle East, particularly involving Iran and the U.S., continue to contribute to market volatility. A recent explosion at Iran’s Bandar Abbas port resulted in significant casualties, highlighting the potential for geopolitical events to disrupt oil markets.

Additionally, diplomatic sources report that backchannel talks between Washington and Tehran have resumed in Oman, aiming to ease tensions in the Gulf. Though early in progress, any breakthrough could temper fears of further supply disruptions in the Strait of Hormuz, through which roughly 20% of the world’s oil passes. Market observers are closely tracking these developments as potential catalysts for price swings.

Market Outlook

While the recent uptick in oil prices is encouraging, market participants remain cautious. Uncertainties surrounding U.S.-China trade negotiations, potential OPEC+ policy changes, and ongoing geopolitical tensions suggest that the oil market may continue to experience volatility in the near term. Investors and analysts will be closely watching developments in these areas to gauge their impact on global oil prices.