Oil prices edged higher in Asian trading on Monday, building on last week’s sharp gains, as the U.S. announced a trade deal with China, though investors remained cautious pending further details on the agreement.
Both contracts rose by more than 4% last week on optimism over a potential de-escalation in Trump’s tariff agenda.
US-China talks ease trade tensions, markets await details
The uptick was driven by optimism after the U.S. and China concluded two days of trade talks in Geneva, signaling a potential de-escalation in their ongoing trade dispute.
U.S. Treasury Secretary Scott Bessent described the discussions as "substantial progress," while Chinese Vice Premier He Lifeng noted an "important consensus" was reached.
Both sides agreed to establish a new economic dialogue mechanism, though specific details are expected to be released later this week.
Investors were hopeful that the agreement might lead to a reduction in the high tariffs imposed during the recent trade tensions, which have seen U.S. tariffs on Chinese goods reach up to 145%.
The easing of trade tensions has improved market sentiment, with global equities and the U.S. dollar also experiencing gains.
As the world’s two largest economies move toward a more stable trade relationship, expectations of stronger industrial activity and consumer demand, especially in China, lifted sentiment around the demand outlook.
OPEC+ hike decision; Ind-Pak tensions remain in focus
Despite the positive outlook, oil price gains were tempered by plans from OPEC+ to increase oil output in May and June.
The hike decision comes at a time when there is already plenty of demand uncertainty.
U.S.-Iran nuclear talks concluded on Sunday, with further negotiations planned, leaving the potential for increased Iranian oil exports uncertain.
The fourth round of talks occurred in advance of Trump’s trip to the Middle East.
Investors also closely watched increased geopolitical tensions between India and Pakistan, as the nuclear-armed neighbors engaged in their worst fighting in decades.
The two countries reached a ceasefire agreement on Saturday, though reports of violations emerged shortly afterward.
