Oil prices temporarily increased due to reports of potential tariff negotiations between China and the US, but both Brent and WTI crude benchmarks are still expected to end the week with a loss.
Saudi Arabia’s changing stance on oil prices and production levels, along with OPEC+’s potential adjustments to output, have contributed to market uncertainty and price volatility.
Despite a temporary surge in prices, the overall market sentiment remains cautious due to ongoing trade tensions and concerns about global demand and supply dynamics in the oil sector.
Crude oil prices staged a rebound earlier today on reports that China had signaled it wants to negotiate with the Trump administration on tariffs. The country’s commerce ministry said it was considering a proposal made by Washington to discuss the tariffs.
Even this slim chance of a de-escalation in the tariff war energized oil traders, leading to Brent crude rising to $62.53 per barrel at the time of writing, with West Texas Intermediate at $59.67 per barrel. Despite the rise, both benchmarks are set to end the week lower than they started as tariff anxiety continues to rule markets.
An additional factor that weakened prices this week was Saudi Arabia’s apparent intention to adjust to lower oil prices for longer and even work to bring them lower. The news was as unexpected as earlier reports that OPEC+ would add 411,000 barrels daily to collective production in May instead of the originally planned 138,000 barrels daily, which helped depress prices further earlier this month.
Yet Saudi Arabia’s moves may be outshined by any actual tariff negotiations between Beijing and Washington. “If Washington runs with it, as I expect it to, this could be a game-changer in the gloom-and-doom mood that has enveloped markets for weeks,” Vandana Hari from Vanda Insights told Reuters. “No one expects a smooth sailing for sure, but it’s an encouraging breakthrough in the impasse that has been weighing on markets,” she added.
OPEC+ is meeting on Monday to discuss June production and might produce yet another surprise for oil traders.
“With non-OPEC+ supply rising robustly and global demand growth facing structural decline, we see no natural re-entry point for these barrels and, ultimately, the group will likely have to endure some price pain no matter when it unwinds its cuts,” BMI said in a research note, as quoted by Reuters.
By Irina Slav for Oilprice.com
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