Crude Benchmarks Head Toward Weekly Gains

Oil prices climbed on Friday, buoyed by renewed optimism surrounding U.S.-China trade relations. Both Brent crude and West Texas Intermediate (WTI) posted moderate gains, setting the stage for a second consecutive week of rising prices. By early afternoon in London, Brent crude had increased by 42 cents (0.65%) to $64.95 per barrel, while WTI rose 41 cents (0.67%) to $62.03.

Both crude benchmarks were on track to end the week over 1.6% higher, reflecting positive investor sentiment driven by a temporary trade truce between the world’s two largest economies.

Trade Truce Fuels Market Optimism

Investor confidence received a boost from the announcement of a 90-day pause in the ongoing U.S.-China trade dispute, which has roiled markets and dampened oil demand projections in recent months. The truce helped alleviate fears of prolonged tariffs and economic slowdown, prompting increased buying activity in the oil markets.

While the pause offers short-term relief, analysts caution that a permanent resolution remains uncertain, and any signs of renewed friction could quickly weigh on oil prices again.

Supply Concerns Temper Gains

Despite the upbeat trade news, oil’s upward momentum was limited by expectations of rising global supply. Earlier in the week, oil prices dropped by more than 2% amid signs of progress in nuclear negotiations between Iran and the United States. A potential agreement could lead to the lifting of sanctions on Iran, allowing it to ramp up oil exports by approximately 400,000 barrels per day.

Adding to the supply pressure, the OPEC+ alliance continues to unwind voluntary production cuts, gradually increasing output and contributing to a more saturated market.

Balancing Act Between Demand and Supply

While trade optimism has provided short-term support for oil prices, the market remains delicately balanced. On one side, a rebound in global economic confidence could strengthen oil demand. On the other, the prospect of additional supply from Iran and OPEC+ could keep prices in check.

Analysts suggest that any sustained rally in oil prices will depend on concrete progress in both the U.S.-China trade negotiations and the timing of Iranian oil re-entry into global markets.

Outlook Remains Uncertain

In the near term, oil traders will be watching closely for updates on diplomatic talks, both between the U.S. and China and in relation to Iran’s nuclear program. Market participants remain cautious but hopeful that easing geopolitical tensions will provide a more stable environment for crude.

For now, oil prices are rising cautiously, navigating a landscape shaped by both diplomatic progress and supply-side risks.