Oil prices edged higher on Friday, building on a 3% surge from the previous session, as easing trade tensions between the United States and China and a new trade deal between the U.S. and the United Kingdom provided fresh optimism to markets. Brent crude was up 43 cents, or 0.68%, trading at $63.27 a barrel, while U.S. West Texas Intermediate (WTI) rose 42 cents, or 0.7%, to reach $60.33 a barrel by early morning trading.
Investors are closely watching the upcoming meeting on May 10 in Switzerland between U.S. Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. The talks aim to reduce tariff tensions that have hindered global trade and oil consumption. Market analysts suggest that even the announcement of formal negotiations and a temporary reduction in tariffs could boost crude prices by an additional $2 to $3 per barrel.
Recent Chinese customs data revealed that exports outpaced expectations in April, while import declines slowed, offering Beijing a morale boost ahead of negotiations. Meanwhile, China’s crude oil imports for April saw a slight monthly dip but climbed 7.5% year-over-year, attributed to an influx of sanctioned oil and stockpiling by state-owned refiners during plant maintenance cycles.
Separately, U.S. President Donald Trump and British Prime Minister Keir Starmer unveiled a new trade agreement that reduces tariffs on U.S. imports to 1.8% from 5.1%. While the U.S. agreed to lower duties on British automobiles, it maintained a 10% tariff on most other goods. Market analysts noted that while such deals may have limited impact on oil markets in isolation, broader trade cooperation could support crude sentiment.
On the supply side, OPEC+ is expected to boost output in the coming months, which could place downward pressure on prices. Nonetheless, overall OPEC production dipped in April due to unplanned declines in Libya, Iraq, and Venezuela. Concurrently, tightening U.S. sanctions on Iran are expected to constrain global supply. Recent penalties on two Chinese refiners purchasing Iranian crude have disrupted their operations, forcing them to obscure the origin of their products.
In South Asia, tensions between Pakistan and India have escalated, with Pakistan launching strikes along India’s western border. Analysts expect this to increase crude procurement and refining activity. Diesel demand could spike due to military mobilization, while jet fuel consumption may fall as air travel disruptions mount. India consumes approximately 5.4 million barrels per day, compared to Pakistan’s 0.25 million.
READ MORE: