Oil prices inched higher on Tuesday as investors cautiously awaited the outcome of ongoing U.S.-China trade talks in London, with market sentiment remaining sensitive to global trade dynamics.
As of 04:50 ET (09:50 GMT), Brent Oil Futures rose 0.2% to $67.19 per barrel, while West Texas Intermediate (WTI) crude futures gained 0.2% to $65.43 per barrel. Both contracts were on track for their fifth consecutive gain, continuing the upward momentum from a more than 4% jump last week. The positive market movement is driven by the prospects of progress in trade talks between the U.S. and China, which have alleviated concerns about a global economic slowdown.
U.S.-China Trade Talks in Focus
Senior U.S. officials, including Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, met with Chinese Vice Premier He Lifeng in London to address issues like tariff rollbacks, export controls, and broader bilateral trade concerns. These high-level discussions are set to continue into Tuesday, with hopes that the negotiations will lead to resolutions on disputes over key exports, particularly rare earth minerals. These minerals are vital to numerous industries, and any disruption in their supply could hinder global production and slow economic growth.
Markets are closely watching these talks, hoping for signs of progress that could ease pressures on global trade flows and stimulate demand for commodities like crude oil. The crude market has struggled throughout the year due to worries about global trade and weak macroeconomic data, particularly from China. In addition, the decision by OPEC+ to gradually increase production this year has weighed heavily on the market.
U.S.-Iran Nuclear Talks and Potential Impact on Oil Supply
In parallel, U.S.-Iran nuclear negotiations remain unresolved, as Iran indicated that it would soon submit a “reasonable, logical, and balanced” counterproposal to the U.S. nuclear deal through Oman. Despite ongoing dialogue, key issues surrounding uranium enrichment remain unsolved, which means that sanctions on Iran’s oil exports are likely to stay in place for now. Iran is a significant oil producer, and if sanctions were lifted, millions of barrels per day could potentially re-enter the global market, increasing supply and putting downward pressure on prices.
Oil prices continue to build on their recent gains, supported by expectations that the ongoing U.S.-China trade talks could lead to a resolution of some key trade disputes, particularly around rare earth exports. However, geopolitical concerns, including the stalemate in U.S.-Iran nuclear talks, continue to weigh on the market, with the potential for increased Iranian oil supply further complicating price dynamics. The outlook for oil prices remains closely tied to these discussions, with any breakthrough in trade talks likely to boost market confidence and oil demand.