Oil Prices Rebound as China Opens Door to Trade Talks with the US

Key Highlights:

• Oil prices rise on hopes of de-escalation in US-China trade tensions
• Crude still set for weekly loss amid global demand concerns
• OPEC+ meeting in focus, with production increases expected
• Weak US and China data weigh on oil outlook
• Iran-related sanctions add further uncertainty

Oil Prices Tick Up as Trade Tensions Ease

Oil prices edged higher in Asian trading on Friday following signals from China that it is open to restarting trade negotiations with the United States. The move fuelled optimism that tensions between the world’s two largest economies—and biggest oil consumers—may begin to ease.

By early Friday, Brent crude futures for July delivery rose 0.8% to $62.62 a barrel, while West Texas Intermediate (WTI) crude gained 0.9% to $59.19.

However, despite the rebound, both benchmarks remain down 5–7% on the week, marking their second consecutive week of losses.

China Indicates Willingness for Talks

China’s Ministry of Commerce said it was evaluating the possibility of engaging in trade talks with the US, though it stressed that any discussions would need to be “sincere” and contingent on the removal of existing unilateral tariffs.

The statement follows reports that US officials have recently reached out to China to initiate dialogue. While both sides appear more open to discussion, past escalations—including the imposition of over 100% tariffs—have created volatility in global markets, particularly in oil.

Global Demand Still Under Pressure

Despite Friday’s price gains, sentiment in oil markets remains fragile. Weak GDP and manufacturing data from both the US and China, released earlier this week, have fuelled concerns about a slowdown in global oil demand.

With both countries playing a central role in the global energy market, any signs of economic weakness raise red flags about future consumption levels.

OPEC+ Meeting in Spotlight

Attention now turns to the upcoming OPEC+ meeting on 5 May, where the oil-producing alliance is expected to announce increases in output. Reports suggest that Saudi Arabia, the group’s de facto leader, has indicated it will not support further price increases through supply cuts.

Several OPEC+ members are reportedly preparing to scale back existing production limits, potentially from June, reversing cuts that have been in place for the past two years.

This shift comes amid continued pressure from US President Donald Trump for lower oil prices and increased global supply.

Iran Sanctions Add to Market Uncertainty

Trump also added to market tension by threatening secondary sanctions on countries purchasing Iranian oil. This follows the US imposing stricter sanctions on Iran’s oil exports, ahead of renewed negotiations on its nuclear programme.

These geopolitical developments could lead to further disruptions in supply, injecting more uncertainty into oil price forecasts.

Conclusion

Oil prices have shown signs of recovery thanks to growing hopes of renewed US-China trade talks, but the market remains cautious. Demand concerns, OPEC+ production decisions, and ongoing sanctions on Iran will continue to influence oil markets in the coming weeks.

While Friday’s gains are welcome, the road ahead is still uncertain for crude, as traders brace for pivotal policy shifts and economic signals from both global powers.

Sources: (Investing.com, Reuters)