Oil prices rose sharply early Monday after the United States and China reached a deal to reduce tariffs on each other’s goods. The agreement eased investor concerns over global trade tensions and the broader economic outlook.
As of 6:52 a.m. ET, U.S. benchmark West Texas Intermediate (WTI) crude was trading at $62.93 per barrel, up 3.13%. International benchmark Brent crude rose by 2.93% to $65.79 per barrel.
The surge came after a weekend of U.S.-China trade talks in Geneva. Early Monday, the White House confirmed that both nations had agreed to reduce tariffs by 115%, while keeping a 10% baseline tariff in place. All other existing trade measures will remain. The tariff reductions will be suspended for 90 days, offering temporary relief for global markets.
In a joint statement, both sides said they would continue discussions through a new dialogue mechanism. Key officials including He Lifeng, China’s Vice Premier, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer, will lead future negotiations.
The market reacted positively to the news, with oil and other cyclical commodities seeing strong gains.
“Crude oil jumps together with other pro-cyclical commodities on news the U.S. and China will temporarily lower tariffs on each other’s products,” said Ole Hansen, head of commodity strategy at Saxo Bank. “This reduces fears of a prolonged economic fallout hurting demand.”
Hansen noted that WTI and Brent could soon test resistance levels near $65 and $69, respectively. However, he cautioned that optimism may be short-lived if the U.S. maintains its hardline trade stance.
Equity markets also rallied on the news, with Dow futures rising early Monday, mirroring the gains seen in oil. Investors are now watching closely to see if the temporary tariff suspension leads to a longer-term resolution between the world’s two largest economies.
Related Topics:
- Traders Eager to Reenter Russian Crude Market, But the Door Remains Closed
- Oil Prices Rise Due to Venezuela Tariffs
- Iraq Gives BP Final Approval for Kirkuk Oil Development