Oil set for weekly gain on Easing Trade Tensions, UK Deal Boosts Sentiment

Oil prices extended gains on Friday, with benchmarks poised to end the week higher as optimism around easing U.S.-China trade tensions and a newly announced U.S.-U.K. trade framework lifted market sentiment.

Brent crude futures rose by 83 cents, or 1.3%, to $63.27 a barrel by 09:05 GMT, while U.S. West Texas Intermediate (WTI) crude climbed 85 cents, or 1.4%, to $60.76. Both contracts were up about 4% for the week, rebounding from multi-week lows.

Trade Optimism Sparks Rally

Investor optimism was buoyed by signals of a thaw in the prolonged U.S.-China trade dispute, which has weighed heavily on global growth and energy demand. Treasury Secretary Scott Bessent is scheduled to meet Chinese Vice Premier He Lifeng in Switzerland on May 10 for preliminary trade negotiations — the first such high-level engagement in months.

“Hopes that the trade war between the U.S. and China is cooling helped Brent jump 3% on Thursday,” said John Evans, analyst at PVM Oil.

Adding to the positive tone, China’s trade data showed exports rose more than expected in April, while the decline in imports slowed, offering some relief to markets ahead of the talks. China’s crude imports were 7.5% higher year-on-year, reflecting strong stockpiling demand from state refiners despite a slight month-on-month dip.

U.S.-UK Deal Adds to Momentum

Separately, the announcement of a breakthrough trade deal between the U.S. and the United Kingdom also helped boost sentiment. Under the deal, Britain agreed to lower tariffs on U.S. imports, a move hailed by both President Donald Trump and U.K. Prime Minister Keir Starmer.

The agreement, while modest in economic scale, reinforced market hopes for broader trade normalization and set the stage for additional deals that could support global demand.

Supply Dynamics Remain in Focus

While trade-related optimism lifted prices, supply-side dynamics continued to cap gains. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, still plan to raise output in coming months.

A Reuters survey showed that total OPEC output edged slightly lower in April, as declines in Libya, Venezuela, and Iraq offset planned production hikes.

Meanwhile, tighter U.S. sanctions on Iran could curb supply further. The Biden administration this week imposed fresh sanctions on a third small Chinese refinery accused of importing Iranian crude, underscoring Washington’s ongoing pressure campaign on Tehran’s energy sector.

With the prospect of improved trade relations and firming macro data from China, oil prices are set to close the week on a strong note. However, markets remain wary of the impact of rising OPEC+ supply and geopolitical flashpoints, particularly in the Middle East and Asia. All eyes now turn to the outcome of the upcoming U.S.-China talks for further clues on demand trajectory.