Oil prices climbed on Friday after China expressed willingness to engage in tariff discussions with the United States, boosting hopes of easing tensions in the ongoing trade war between the world’s two largest economies.
By 2:50 pm AEST (4:50 am GMT), Brent crude futures rose $0.44, or 0.7%, to US$62.57 per barrel, while West Texas Intermediate (WTI) crude gained $0.44, or 0.7%, to $59.68 per barrel.
China’s Commerce Ministry said on Friday that Beijing is "evaluating" a proposal from Washington to hold talks aimed at addressing U.S. President Donald Trump’s sweeping tariffs. The remarks signalled a potential thaw in trade hostilities that have weighed heavily on financial markets and crude demand in recent weeks.
Concerns that prolonged trade disputes could drag the global economy into recession and dampen energy consumption have pressured oil prices, just as the OPEC+ alliance prepares to reassess its production policy.
Oil was also supported by renewed geopolitical risks. President Trump has threatened to impose secondary sanctions on entities purchasing Iranian oil.
As ANZ analysts noted, “Crude oil prices rebounded as the spectre of more sanctions on Iran raised fears of tighter supplies. President Trump said that any nation or person that buys oil or petrochemicals from Iran will be subject to secondary sanctions. This ratcheted up pressure on Tehran as nuclear talks with Washington hit a snag.
"Russian supply is also on the radar of U.S. officials. Senator Lindsey Graham said he had the commitment of 72 colleagues for a bill that would enact ‘bone crushing’ sanctions on Russia and tariffs on countries taking its oil, if Putin didn’t engage in serious talks to end the war in Ukraine.”
Adding to the bullish tone, OPEC output unexpectedly fell last month. A Bloomberg survey released Thursday revealed that the cartel’s April production dropped by 200,000 barrels per day to 27.24 million bpd. This comes despite earlier plans to increase supply.
Meanwhile, eight OPEC+ nations are expected to convene on May 5 to finalise production plans for June, with some members likely to propose accelerating output hikes for a second consecutive month.
