Brent crude futures increased by 43 cents, or 0.67%, reaching $64.34 per barrel in early Asian trading. At the same time, U.S. West Texas Intermediate (WTI) crude rose 48 cents, or 0.79%, to $61.50 a barrel. These increases followed a strong performance on Friday, when both benchmarks gained more than $1 and posted weekly advances exceeding 4%. These were their first weekly gains since mid-April, supported in part by recent developments in international trade that reassured investors about potential economic disruptions.
The United States and China concluded their latest round of trade discussions on a positive note. U.S. officials mentioned reaching a preliminary agreement aimed at reducing the trade deficit, while Chinese representatives highlighted what they described as an important consensus between the two sides. Although neither side disclosed specifics, a joint statement was expected to follow, signaling forward momentum in a conflict that has cast a long shadow over global economic activity.
If trade flows between the two countries are restored, it could provide a meaningful lift to oil demand. The imposition of tariffs in recent years has disrupted supply chains and reduced trade volumes, ultimately dampening energy consumption. Renewed trade ties may help reverse some of that damage, encouraging increased industrial activity and transportation, both of which are significant drivers of oil demand.
Still, the rise in prices was somewhat tempered by expectations of increased oil supply. The alliance of oil-producing countries known as OPEC+, which includes members of the Organization of the Petroleum Exporting Countries and non-members, has indicated plans to accelerate output in May and June. The increase aims to meet recovering global demand but also adds more crude into the market, potentially putting a cap on price gains.
A recent survey suggested that OPEC production edged slightly lower in April despite these intentions. This could provide a balancing factor to the planned increases, especially if demand continues to rise. Additionally, developments related to Iran’s nuclear program added further uncertainty to the outlook for oil prices.
Talks between U.S. and Iranian negotiators took place in Oman over the weekend, aiming to resolve ongoing disputes. While no major outcomes were announced, further discussions were planned. Iran has insisted publicly on continuing its uranium enrichment program, a sticking point that complicates the path to any comprehensive deal. A potential agreement that leads to the easing of sanctions on Iranian oil exports could increase global supply, which might put downward pressure on prices.
Meanwhile, within the United States, the number of active oil and gas rigs has fallen to its lowest level since January. This trend indicates caution among domestic producers amid mixed signals about future pricing and demand. The reduction in rig count may limit future output growth in the near term, potentially tightening supply and offering some support to prices.
Oil markets remain at a crossroads, influenced heavily by geopolitical developments and international policy decisions rather than just traditional supply and demand factors. Positive signals from U.S.-China negotiations offer a potential upside for demand, while the return of Iranian crude and rising OPEC output could temper that optimism. In the weeks ahead, energy traders will closely watch for official statements, policy shifts, and economic data that could clarify the market’s direction.
