Riyadh: Global oil prices rose on Monday after the United States and China announced they had reached a framework for a major trade agreement, easing months of tension between the world’s two largest economies. The development sparked optimism in energy markets, with traders expecting the deal to boost global demand for crude oil.
Brent crude futures increased by 47 cents, or 0.71%, to settle at $66.41 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed 44 cents, or 0.72%, to $61.94 per barrel. The gains marked a rebound for oil markets that had been struggling in recent weeks amid fears of a global economic slowdown and oversupply concerns.
The announcement of the trade deal framework, described by officials as “substantial,” helped lift investor confidence. Analysts noted that an improvement in trade relations between Washington and Beijing could lead to stronger industrial output and energy consumption, particularly in Asia, where China remains the world’s largest oil importer.
Oil prices were also supported by rising geopolitical tensions and newly imposed sanctions by the United States and the European Union on Russian energy companies, including Rosneft and Lukoil. The measures have raised concerns over potential supply disruptions, adding a risk premium to global oil markets.
Earlier this month, oil prices had slumped to their lowest level in five months as traders reacted to renewed tariff threats and weak demand forecasts. The fresh agreement between the U.S. and China appears to have temporarily reversed that trend, though analysts warn that the recovery may be fragile.
Despite the positive market reaction, uncertainty remains over the implementation of the trade framework and the effectiveness of sanctions targeting Russian oil exports. Recent reports indicate that major Chinese state-owned refiners have paused seaborne purchases of Russian crude, a move that could tighten global supplies in the short term.
However, some analysts caution that demand-side risks persist. Slower-than-expected growth in China’s manufacturing sector and high inventories in the United States could limit further price gains.
The outlook for oil markets will depend largely on how the trade agreement evolves, as well as the enforcement of sanctions and decisions by OPEC+ on future production levels. For now, traders appear cautiously optimistic, with the market showing signs of recovery after months of volatility.
As one analyst noted, “This deal framework offers relief to oil markets that have been under pressure for much of the year. But with sanctions, supply dynamics, and global growth still in flux, it’s far too early to declare victory.”