Oil Prices Surge to $61.40 as Trade War Fears Ease, but China Tensions Linger

Oil prices climbed to near $61.30 per barrel on the New York Mercantile Exchange (NYMEX) during Monday’s North American trading session, fueled by growing optimism that the global trade war may be less severe than feared. Investors are increasingly confident that trade disputes will remain largely confined to the United States and China, sparing other major economies for now.

The rally in West Texas Intermediate (WTI) futures comes on the heels of positive developments in global trade talks. U.S. President Donald Trump recently announced a 90-day pause on imposing new reciprocal tariffs on most trading partners, with the notable exception of China. This move has calmed markets, signaling a potential de-escalation in global trade tensions. Adding to the optimism, Kevin Hassett, head of the U.S. National Economic Council (NEC), told Fox Business Network that tariff negotiations with the European Union are making “enormous progress,” further boosting investor confidence.

However, the U.S.-China trade conflict remains a significant wildcard. Last week, Trump escalated tariffs on Chinese goods to a staggering 145%, including duties on fentanyl, in retaliation for Beijing’s countermeasures. China responded in kind, hiking its own tariffs on U.S. goods to 125% to offset the impact. Beijing has vowed to take all necessary steps to “safeguard its rights and interests,” raising concerns about a prolonged tit-for-tat tariff battle.

While a less-disruptive trade war could stabilize oil demand compared to earlier fears, uncertainty looms large. As the world’s largest energy importer, China’s economic health is critical to global oil markets. A slowdown in Chinese growth due to escalating trade tensions could dampen oil demand, keeping prices under pressure despite the recent uptick.

For now, markets are riding a wave of cautious optimism, but the U.S.-China standoff ensures that volatility remains just a headline away. Investors will be closely watching for further signals from both Washington and Beijing to gauge the future direction of oil prices.