Oil prices rise: US-China trade talks boost market; oversupply could return if sanctions on Russia less effective

Oil prices rose on Monday after the United States and China outlined a framework for a potential trade deal. The move raised hopes of improved relations between the world’s two largest oil consumers.By 0027 GMT (local time), Brent crude futures were up 46 cents or 0.7%, at $66.40 a barrel. US West Texas Intermediate (WTI) crude rose 46 cents or 0.75% to $61.96, as reported by Reuters. Both benchmarks had jumped significantly last week, Brent by 8.9% and WTI by 7.7% after the US and European Union imposed sanctions on Russia.Experts say the trade progress has calmed fears that tariffs and export controls could slow global economic growth and reduce oil demand. Haitong Securities stated in a note that market expectations have improved following the imposition of new sanctions on Russia and the easing of US-China tensions. The development has helped counter earlier concerns about crude oversupply, which had pushed prices down in early October.US Treasury Secretary Scott Bessent on Sunday said top officials from both countries agreed on a “very substantial framework” during talks in Kuala Lumpur. The plan would prevent full 100% US tariffs on Chinese goods and delay China’s controls on rare-earth exports.President Donald Trump also expressed optimism, saying he expected to finalize an agreement soon and hold meetings with Chinese President Xi Jinping in both China and the United States.“I think we’re going to have a deal with China,” he said. “We’re going to meet them later in China and in the US, either Washington or Mar-a-Lago.”Analysts say the positive trade development supports oil prices in the short term, even as concerns remain over Russia. Tony Sycamore, a market analyst at IG, said, “The positive trade-deal framework helps offset concerns that Russia could offset new U.S. sanctions, targeting Rosneft and Lukoil, by offering deeper discounts and using shadow fleets to lure buyers.”However, Yang An of Haitong Securities warned that if sanctions on Russian energy are less effective than expected, oversupply could return and put pressure on oil prices.