Oil prices edged higher in early Asian trading on Monday, lifted by optimism over a new trade framework between the United States and China that has eased fears of a prolonged trade war between the world’s two largest economies. The partial thaw in tensions gave markets a boost, signaling a potential recovery in global demand sentiment after months of uncertainty.
At the time of writing, WTI had risen 0.26% to $61.66 while Brent was trading at $66.12, a 0.27% increase. The move followed news that senior U.S. and Chinese economic officials had reached what Treasury Secretary Scott Bessent described as a “very substantial framework” for trade cooperation during meetings held in Kuala Lumpur. The agreement reportedly averts the full implementation of a 100 percent tariff on Chinese goods and delays China’s planned export restrictions on critical rare earth materials, a move widely interpreted as a sign that both sides want to stabilize relations after years of escalation.
The renewed optimism over trade relations between Washington and Beijing helped offset recent market jitters about slowing demand in Asia. While it remains far from a formal deal, it appears to represent a genuine attempt by both governments to restore predictability to trade flows. For oil markets, this development has been particularly significant, as China remains the world’s largest crude importer and a vital demand anchor for global prices. A sustained trade confrontation between the two economic powers would have triggered weaker manufacturing output, lower energy consumption, and reduced industrial activity across Asia.
The upward momentum is a continuation of last week’s rally, which was sparked by President Trump announcing sanctions on Russia’s two largest oil companies. The move is expected to curtail Russian oil supply entering global markets, although Russia has proven to be very effective in avoiding sanctions through the use of its shadow fleet.
Going forward, there is plenty of downside risk in markets, with a U.S.-China trade deal far from certain and plenty of Russian barrels to return to markets. With that said, oil markets appear to be in a far healthier position at the start of this week than just one week ago, when Brent was threatening to break the $60 mark.
By Charles Kennedy for Oilprice.com
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