Oil prices clawed back from five-month lows on Monday as investors seized on signals from the Trump Administration suggesting potential diplomatic engagement with China, offering hope that escalating trade tensions between the world's two largest oil consumers might ease.
Brent crude rose 1.39% to $63.60 per barrel by early Monday trading, while West Texas Intermediate (WTI) crude gained 1.48% to $59.77 per barrel. The recovery came after both benchmarks plummeted more than 4% on Friday to their lowest levels since May, following President Trump's announcement of 100% tariffs on Chinese exports and China's retaliatory tightening of rare earth export controls.
Market Relief as Diplomatic Tone Softens
The rebound followed more conciliatory remarks from Trump and Vice President JD Vance on Sunday, with Trump telling reporters aboard Air Force One, "We'll be fine with China," though he maintained that the November 1 tariff implementation remains planned. This shift in rhetoric came after a week of intense trade escalation that began when China expanded export controls on rare earth materials, prompting Trump's tariff threats.finance.yahoo+2
"The price collapse last week was mainly driven by the ceasefire in Gaza and the resurgence of volatility in U.S.-China trade discussions," said DBS energy analyst Suvro Sarkar. He emphasized that the recent market decline appears moderated by both nations' readiness to engage in negotiations, with short-term outlook heavily dependent on trade discussion results.cnbc
Goldman Sachs analysts noted the central market question is whether the threatened measures will be implemented or remain negotiating tactics ahead of potential bilateral discussions at the Asia-Pacific Economic Cooperation summit later this month. "The most probable outcome appears to be that both parties will retreat from their most extreme policies," the bank stated.reuters
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