Oil prices saw a 1% increase on Wednesday, buoyed by optimism surrounding potential trade negotiations between China and the United States, along with reports that Iraq plans to reduce its oil production in April.
Brent crude futures rose by 70 cents, or 1.08%, reaching $65.37 per barrel, while U.S. West Texas Intermediate crude also climbed 70 cents, or 1.14%, to $62.03 per barrel.
The price uptick followed a Bloomberg report that highlighted improving sentiment towards U.S.-China trade talks. An anonymous source indicated that China was seeking greater respect from the U.S. before agreeing to future negotiations and wanted a new primary contact for discussions. The possibility of easing tensions in the ongoing trade war is viewed as a positive signal for global economic growth and oil demand.
Further supporting the price rise, Iraq announced plans to cut its oil production by 70,000 barrels per day in April to align with its OPEC+ commitments. This decision helped bolster oil prices, despite concerns over slower global demand growth.
However, the price gains were somewhat capped by predictions from the International Energy Agency (IEA), which forecasted the slowest growth in global oil demand in five years by 2025. The World Trade Organization (WTO) also downgraded its forecast for global merchandise trade, citing the ongoing U.S.-China trade war and rising tariffs as contributing factors. The WTO warned that these factors could lead to the biggest decline in trade since the COVID-19 pandemic’s peak.
Oil prices have dropped about 13% this month, largely due to rising tariffs and increased production from OPEC+ members, including Russia. U.S. tariffs on Chinese goods have led to retaliatory measures from Beijing, further pressuring global oil markets. Despite these challenges, China’s GDP growth of 5.4% in the first quarter exceeded expectations, although analysts caution that this strong performance may not last throughout the year due to persistent trade tensions between the world’s two largest economies.
