Oil prices saw a slight uptick on Friday following news that China was open to discussing tariffs with the United States, fueling optimism that the ongoing trade war between the two largest global economies could ease. Brent crude futures rose by 9 cents, or 0.1%, reaching $62.22 a barrel, while U.S. West Texas Intermediate crude gained 6 cents, or 0.1%, reaching $59.30 a barrel. Despite this, both benchmarks were poised for significant weekly declines, with Brent on track for a 7% drop and WTI down by 6%, marking the largest weekly losses in a month.
The announcement from China’s Commerce Ministry that it was reviewing a proposal from Washington for tariff discussions raised hopes of resolving the long-standing trade tensions. These tensions have raised fears of a global recession, potentially impacting oil demand just as the OPEC+ group plans to increase production. The situation remains fluid, with some experts expressing cautious optimism that relations between the U.S. and China may improve, although the outlook remains uncertain.
Beyond the trade talks, oil prices were also supported by U.S. President Trump’s remarks about imposing secondary sanctions on nations buying Iranian oil. China, the world’s largest importer of Iranian crude, could be directly affected by such sanctions. Trump’s comments came shortly after the postponement of U.S.-Iran nuclear talks, and they were part of a broader strategy to intensify pressure on Iran, including efforts to reduce the country’s oil exports to zero, in a bid to prevent Iran from advancing its nuclear weapons program.
In the previous trading session, oil prices rose by nearly 2% following Trump’s remarks, helping to recover some of the earlier losses caused by concerns over increased OPEC+ production. Saudi Arabia, the leading member of OPEC+, reportedly informed allies that it was unwilling to continue supporting oil prices through additional supply cuts. Several OPEC+ countries are expected to propose further increases in output in June, marking a second consecutive month of output hikes. With non-OPEC+ production increasing and global demand growth facing a decline, analysts warn that oil prices may experience pressure regardless of when OPEC+ eases its production cuts.
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