Oil Prices Steady Near Seven-Week High as Markets Watch US-China Trade Talks
Oil prices hovered close to their highest levels in seven weeks on Tuesday, with traders awaiting fresh signals from ongoing trade negotiations between the United States and China.
Analysts believe a successful agreement between the world’s two largest economies could support global economic growth and spur demand for oil, potentially lifting prices further.
Brent crude futures fell by 17 cents, or 0.3%, to close at $66.87 per barrel, while U.S. West Texas Intermediate (WTI) crude declined 31 cents, or 0.5%, to finish at $64.98. On Monday, Brent had reached its highest level since April 22, and WTI its strongest since April 3.
Trade discussions between U.S. and Chinese officials entered a second day in London and extended into the evening, with both sides striving for a resolution to disputes over export restrictions that threaten an already fragile tariff ceasefire.
U.S. Commerce Secretary Howard Lutnick noted that the talks were progressing well and expressed hope for a conclusion by Tuesday night, though they might continue into Wednesday.
Meanwhile, the World Bank revised its global economic growth outlook for 2025 downward by 0.4 percentage points to 2.3%, citing elevated tariffs and increasing geopolitical uncertainty as major obstacles for most economies.
Supply Outlook and OPEC+ Developments
On the supply side, Chinese refinery allocations revealed that Saudi Aramco plans to deliver approximately 47 million barrels of crude to China in July—1 million barrels less than the previous month—according to Reuters.
Harry Tchilinguirian of Onyx Capital suggested this could indicate that even as OPEC+ unwinds production cuts, the increase in output may be modest. ANZ’s senior commodity strategist Daniel Hynes added that the market remains cautious over the possibility of further production hikes from the group.
OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia, proposed a July output increase of 411,000 barrels per day—the fourth consecutive monthly adjustment toward lifting earlier curbs.
However, a Reuters survey showed that OPEC’s actual production increase in May was limited. Iraq, the second-largest OPEC producer, underproduced to offset previous overages, while Saudi Arabia and the UAE posted smaller-than-planned increases.
Geopolitical Tensions and Sanctions
Iran announced plans to propose a new framework for nuclear talks after rejecting a recent U.S. offer, with President Trump reaffirming that both nations remain divided—especially on the issue of uranium enrichment on Iranian soil.
As the third-largest oil producer in OPEC, any easing of U.S. sanctions on Iran could allow it to boost exports, which would likely put downward pressure on oil prices.
In Europe, the European Commission proposed its 18th sanctions package against Russia, targeting key sectors such as energy, finance, and defense in response to the war in Ukraine. With Russia being the second-largest crude producer globally in 2024—after the U.S.—further sanctions could restrict supply and support global oil prices.
U.S. Inventory Trends
The American Petroleum Institute and the U.S. Energy Information Administration are scheduled to release their weekly oil inventory data on Tuesday and Wednesday, respectively.
Market expectations point to a 2 million barrel draw from U.S. stockpiles for the week ending June 6, marking the third consecutive weekly decline—something not seen since January.
This contrasts with a 3.7 million barrel build during the same week in 2024, and a five-year average build of 2.8 million barrels for the same period (2020–2024).
