Oil Prices Rebound on Easing of US-China Tariffs and Trade Optimism

Crude oil prices surged on Monday following renewed optimism about global economic growth, after the United States and China agreed to temporarily roll back tariff measures.

The two countries, which are the world’s largest consumers of petroleum, announced over the weekend in Switzerland that they would reduce high tariff rates by 115% for an initial 90-day period while trade negotiations continue.

US Treasury Secretary Scott Bessent confirmed the development Monday, noting that this temporary arrangement could pave the way for a more comprehensive agreement.

“I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” Bessent said during an interview on CNBC.

Crude oil markets responded swiftly to the announcement. US West Texas Intermediate (WTI) crude futures rose by $2.52, or 4.1%, to $63.54 per barrel. Global benchmark Brent crude increased by $2.33, or 3.65%, to $66.24 per barrel. Asian trading also reflected the optimism, with WTI and Brent each climbing more than 3% in early sessions.

The recent plunge in oil prices to four-year lows had been largely attributed to President Donald Trump’s broad tariff policies, which heightened fears of a global recession and weakened oil demand. The easing of tariffs between the US and China is now seen as a step toward restoring trade flows and economic activity, potentially strengthening energy consumption.

According to the revised terms, US tariffs on Chinese goods have been adjusted to 30%, while China’s tariffs on American imports now stand at 10%. These new rates reflect a substantial drop from previously elevated levels, which Bessent had previously described as effectively creating a trade embargo.

Still, broader market dynamics continue to influence oil prices. OPEC and its allies (known as OPEC+) have agreed to boost production in the coming months, which could limit further price gains. While a Reuters survey reported a slight dip in OPEC output in April, production increases are expected to resume in May and June.

Meanwhile, supply-side uncertainties remain. Ongoing US-Iran negotiations over Tehran’s nuclear program could result in a new agreement, potentially leading to increased Iranian oil exports and additional downward pressure on prices. At the same time, US shale oil producers are closely monitoring price levels. Firms like Diamondback Energy have signaled that prices must reach the mid- to high-$60s for production to remain viable.

The latest tariff developments have also contributed to broader market confidence, with last week marking the first positive week for oil prices since mid-April. In addition to the China deal, a recent US trade agreement with the United Kingdom has further supported investor sentiment.

With input from CNBC and Reuters.