Oil prices increased on Tuesday as investors anticipated the results of U.S.-China discussions that might facilitate the easing of trade tensions and enhance fuel demand. Brent crude futures climbed by 28 cents, or 0.4 percent, reaching $67.32 a barrel by 03:30 GMT (currently trading above $67.2). Meanwhile, U.S. West Texas Intermediate crude gained 23 cents, or 0.4 percent, to $65.52 (now trading above $65.35). On Monday, Brent had surged to $67.19, marking the highest level since April 28, buoyed by the potential for a U.S.-China trade agreement.
U.S.-China trade talks were scheduled to continue for a second day in London, with top officials seeking to alleviate tensions that have escalated from tariffs to rare earth restrictions, threatening global supply chain stability and slower economic growth. Prices have rebounded as concerns regarding demand have diminished, thanks to the trade discussions between Washington and Beijing, alongside a favorable U.S. jobs report. However, analysts from Goldman Sachs warned of risks to North American supply due to wildfires in Canada.
Read more: Crude oil prices steady above $66.4 as market eyes U.S.-China trade discussions
Market implications of OPEC supply increases
U.S. President Donald Trump stated on Monday that the discussions with China were progressing positively and that he was “only getting good reports” from his team in London. A trade agreement between the U.S. and China could bolster the global economic outlook and increase demand for commodities, including oil.
Additionally, a Reuters survey indicated that the Organization of the Petroleum Exporting Countries (OPEC)Â oil output increased in May, although the rise was constrained as Iraq produced below its target to offset earlier overproduction. OPEC+, which accounts for about half of the world’s oil supply and includes OPEC members and allies like Russia, is expediting its plan to reverse its most recent layer of output cuts.
“The prospect of further hikes in OPEC supply continues to hang over the market,” Reuters reported, citing Daniel Hynes, senior commodity strategist at ANZ, who noted in a statement, “A permanent shift to a market-driven strategy (in OPEC) would push the oil market into a sizeable surplus in the second half of 2025 and almost surely lead to lower oil prices.”
