Oil prices surged as the U.S. announced its first post-tariff trade deal with the UK, signaling potential market stability.
U.S.-China trade talks are set to begin in Geneva, marking the first step toward easing trade tensions.
Despite optimism, OPEC+ production increases are expected to limit oil price growth.
Oil prices rose by more than 1% early on Thursday as the market expects a U.S.-UK trade deal announcement later today and the start of U.S.-China ice-breaker talks later this week.
As of 8:35 a.m. EDT on Thursday, the U.S. benchmark, WTI Crude, was up by 1.89% at $59.15. The international benchmark, Brent Crude, was trading 1.62% higher at $62.12 per barrel.
Oil and equity markets were buoyed on Thursday by the announcement from U.S. President Donald Trump that the United States would sign the first post-tariff trade deal with the United Kingdom.
“The agreement with the United Kingdom is a full and comprehensive one that will cement the relationship between the United States and the United Kingdom for many years to come,” President Trump teased on Truth Social, adding that a press conference on the deal is scheduled at 10 a.m. ET at the Oval Office.
“Because of our long time history and allegiance together, it is a great honor to have the United Kingdom as our FIRST announcement. Many other deals, which are in serious stages of negotiation, to follow!” President Trump said.
The first trade deal to be announced since the U.S. President threatened tariffs on all trade partners instilled hopes in the market that compromises and deals can be reached and recessions and a dip in oil demand could be avoided.
This lifted oil prices and the Dow futures early on Thursday.
In other trade talks, the United States and China are expected to hold on Saturday initial talks that could be a step toward de-escalating the trade war between the world’s two biggest economies.
U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet China’s Vice-Premier He Lifeng in Geneva, Switzerland, to discuss trade.
Yet, the upside to oil prices is being capped by the OPEC+ plan to continue boosting production by more than previously expected.
By Tsvetana Paraskova for Oilprice.com
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