Oil Prices Edge Higher as US-China Trade Talks Fuel Market Optimism

Oil prices have ticked upwards in recent days, with markets closely tracking the latest developments in the ongoing trade negotiations between the U.S. and China. Investors see the talks as a potential turning point that could ease tensions between the two largest economies, which in turn may reignite global energy demand.

As of early this week, Brent crude rose to $66.65 per barrel, up from $63.35 the week before. West Texas Intermediate (WTI) climbed to $64.77 from $60.94, and Oman crude settled at $65.83. While the gains aren’t dramatic, the market appears to be positioning for possible further moves.

Attention has shifted to London, where senior officials from both countries have convened for two days of trade discussions. The talks cover a wide range of sensitive topics including tariffs and export restrictions on rare earth materials. The goal: reduce trade barriers, stabilize global supply chains, and create room for broader economic recovery.

This improved sentiment has already made its way into the oil markets. Brent futures briefly touched $67.19 on Monday—marking a new high since April 28—as optimism builds around the prospects of a preliminary agreement.

One topic drawing particular scrutiny is China’s restriction on rare earth exports. U.S. National Economic Council Director Kevin Hassett disclosed that Washington is pushing for the removal of these limits to ensure a stable supply of materials vital to electric vehicles, electronics, and defense technology. Any policy changes here could ripple quickly through global supply chains.

Over the past week, oil price fluctuations have been fueled more by geopolitical headlines than by shifts in fundamental supply and demand. A drone strike by Ukraine on a Russian military facility initially pushed prices higher. Later, after President Trump indicated that he had spoken with Chinese President Xi Jinping and had dispatched top officials to London for negotiations, market confidence climbed further, helping support oil prices.

Looking ahead, investors remain focused on the outcome of the trade talks. Even limited progress—such as easing select restrictions—could be enough to push oil prices higher in the short term.

At the same time, markets are also watching whether OPEC+ will increase output at next month’s meeting, a move that could exert downward pressure on prices. For now, however, trade-related optimism appears to outweigh supply-side uncertainties.

In summary, the market is caught between cautious optimism and wait-and-see sentiment. Oil prices over the next one to two weeks are likely to move in lockstep with each turn in trade negotiations. Investors would be wise to monitor both the talks and upcoming OPEC decisions closely to capitalize on potential market shifts.