Oil prices experienced an uptick on Friday, following a nearly 3% rise in the previous session. This increase comes as trade tensions between the United States and China appear to be easing, coinciding with Britain’s announcement of a significant trade deal with the U.S. Brent crude gained 43 cents, reaching $63.27 per barrel, while U.S. West Texas Intermediate crude increased by 42 cents, settling at $60.33 per barrel as of 0731 GMT. Key discussions are set to take place between U.S. Treasury Secretary Scott Bessent and China’s top economic official, Vice Premier He Lifeng, on May 10 in Switzerland. Their aim is to resolve ongoing trade disputes that have been impacting crude oil consumption.
Industry analysts believe that if formal trade negotiations are initiated and tariffs are reduced, oil prices could potentially rise by an additional $2-$3 per barrel. China’s April exports surpassed expectations, and imports saw a reduction in declines, which should provide some relief before the tariff talks. Although crude oil imports slightly decreased from March, they still marked a 7.5% year-over-year increase, primarily due to heightened sanctioned shipments and state refiners stockpiling oil during maintenance periods. In a separate development, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a new agreement whereby Britain has lowered tariffs on U.S. imports to 1.8% from 5.1%.
Although the U.S. has reduced duties on British cars, it retains a 10% tariff on several other goods. Analysts suggest that any further U.S. trade agreements with major partners would have a minimal effect on oil market sentiment. Elsewhere, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are looking to increase oil output, which may exert downward pressure on prices. A recent Reuters survey indicated a slight reduction in OPEC oil output in April due to production declines in Libya, Venezuela, and Iraq.
Additionally, stricter U.S. sanctions on Iran could constrain oil supply and escalate prices. Simultaneously, escalating tensions between India and Pakistan, highlighted by recent military actions, have the potential to influence crude procurement and refinery activity in both nations. Rystad Energy analysts project an increase in diesel demand due to military mobilization, while airline fuel consumption may dwindle as airspace restrictions affect flight operations. According to estimates, India’s daily crude demand stands at 5.4 million barrels, compared to Pakistan’s 0.25 million barrels.