Oil Prices Rise Amid US-China Trade Optimism and Iran Deal Uncertainty

Oil prices inched higher on Friday, rebounding from a steep drop in the previous session, as optimism over U.S.-China trade relations outweighed concerns about the potential return of Iranian oil supply. Brent crude futures climbed 17 cents (0.26%) to $64.70 per barrel, while U.S. West Texas Intermediate (WTI) crude increased 18 cents (0.29%) to $61.80.

This week's gains, now topping 1%, were fueled by a temporary pause in the U.S.-China trade war. The two largest global economies and oil consumers agreed to suspend new tariffs for 90 days, boosting market sentiment and easing fears of slowing global oil demand.

Earlier losses came after U.S. President Donald Trump stated that Washington was nearing a nuclear deal with Iran, suggesting Tehran had “sort of” accepted the terms. However, a source close to the negotiations revealed that significant differences still remain, leaving uncertainty around the timeline for a full agreement.

Market focus remains on global supply dynamics, particularly the possibility of increased Iranian exports if sanctions are lifted. This comes amid concerns over rising output from OPEC+ members, especially Saudi Arabia, as production cuts are gradually eased.

According to the International Energy Agency (IEA), global oil supply is expected to grow by 1.6 million barrels per day in 2025, an upward revision of 380,000 barrels from its previous forecast. The increase is largely attributed to expanding output from major oil producers within the OPEC+ alliance.

Analysts at ANZ noted that reduced geopolitical risk, along with expectations of higher supply, is dampening bullish sentiment. Nevertheless, oil prices are holding steady as markets balance hopes for stronger demand against the uncertainty of supply shocks.