Oil prices rise amid US-China trade talks

Oil prices are rising amid trade talks between the US and China, as well as threats from European leaders to impose sanctions against more than 100 oil tankers from the Russian "shadow fleet" if the Russian Federation refuses to accept a ceasefire in Ukraine.

 

During the week, July Brent crude futures rose 4.4% to a 10-day high of $64/barrel, returning to last month's level on hopes of an end to the US-China trade war.

 

Over the weekend, US Treasury Secretary Scott Bessant and Chinese Vice Premier He Lifen held talks in Switzerland that should improve relations between the countries after the trade war started by Trump.

 

On his social network Truth Social, Trump wrote yesterday about a "complete reset" of relations with China after the negotiations. "Today in Switzerland, a very good meeting was held with representatives of China, at which, in a constructive atmosphere, the terms of a complete reset of relations between both Chinese businesses in the United States and American businesses in the PRC were agreed," Trump added.

 

The parties agreed to reduce mutual tariffs for 90 days and eliminate some of them. Thus, the 145% US tariff on most Chinese goods will be reduced to 30% by May 14, and the 125% Chinese tariff on American goods will be reduced to 10%. At the same time, Bessent reported that the tariff reduction will not apply to sectoral tariffs imposed on all US trading partners, and tariffs introduced during Trump's first term will remain in force.

 

Oil prices were also supported by the statement of US senators about the possible introduction of new sanctions against Russian oil, which will reduce supplies on the world market. Senator Graham said that if the Russian Federation refuses to accept the ceasefire in Ukraine, he, together with 72 senators, will vote for a bill that will introduce new sanctions against the Russian Federation, in particular, a 500% duty on imports of goods from countries that buy Russian crude oil, petroleum products, gas and uranium.

 

Negotiations between the US and Iran will take place in the coming days, which could reduce geopolitical tensions in the Middle East and have a positive impact on crude oil prices.

 

Rising oil prices will halt the decline in vegetable oil prices, especially palm oil, but overall markets will remain under pressure from increased supply and reduced demand.