Oil prices edged higher on Monday as the United States and China outlined a trade-deal framework, easing concerns of escalating tariff tensions between the world’s two biggest energy consumers.
The development has brightened market sentiment, with traders betting that improved relations could sustain global demand and support crude prices.
Brent crude futures climbed 46 cents, or 0.7 per cent, to $66.40 a barrel in early Asian trading, while US West Texas Intermediate (WTI) crude gained 46 cents, or 0.75 per cent, to trade at $61.96, reported Reuters.
The two benchmarks had already surged 8.9 per cent and 7.7 per cent, respectively, the previous week, fuelled by renewed US and EU sanctions on Russia.
According to Haitong Securities, the combination of new sanctions and easing trade friction between Washington and Beijing has revived market confidence. The firm noted that expectations of better cooperation are helping offset earlier concerns about crude oversupply that had dragged prices down in early October.
‘Substantial Framework’ Agreed in Kuala Lumpur
US Treasury Secretary Scott Bessent revealed that top economic officials from both nations finalised a “very substantial framework” for a trade deal during meetings in Kuala Lumpur.
The framework is expected to pave the way for President Donald Trump and President Xi Jinping to discuss deeper trade cooperation later this week.
Bessent confirmed that the agreement would help avert the threatened 100 per cent US tariffs on Chinese goods and delay China’s rare-earth export restrictions.
President Trump struck an upbeat tone, telling reporters, “I think we’re going to have a deal with China. We’re going to meet them later in China and we’re going to meet them in the US, either Washington or Mar-a-Lago.” His comments reinforced optimism that the two sides are edging closer to ending years of on-and-off trade disputes.
Market Eyes Russia Sanctions Impact
The improving trade sentiment also helped balance market concerns over Russia’s ability to navigate new sanctions imposed by the US and EU. The measures, which target major Russian energy firms Rosneft and Lukoil, could potentially tighten global oil supply. However, analysts cautioned that Moscow may look to offset the impact by offering steep discounts and deploying “shadow fleets” to continue exports.
Tony Sycamore, a market analyst at IG, noted that the optimism surrounding the US-China talks has provided an important counterweight to worries about Russian supply manoeuvres. Still, Haitong Securities’ analyst Yang An warned, “If sanctions on Russian energy are less effective than expected, oversupply pressures could return to the market.”
