Oil prices rose by about 1% on Wednesday, driven by positive sentiment from potential trade talks between China and the United States and a report indicating that Iraq would reduce its oil production in April.
Brent crude futures climbed 70 cents, or 1.08%, to $65.37 per barrel, while U.S. West Texas Intermediate crude also gained 70 cents, or 1.14%, to $62.03.
The rise in prices followed a Bloomberg report citing an anonymous source, which suggested that China was seeking more respect from the U.S. before agreeing to future trade discussions. The source also indicated that China wanted a new primary contact for negotiations.
The possibility of de-escalating the trade war between the U.S. and China is seen as reducing the downside risks to global economic growth and oil demand.
Adding to the bullish sentiment, Iraq announced plans to cut its oil output by 70,000 barrels per day in April to meet its OPEC+ targets. This decision supported oil prices, despite concerns over slower global oil demand growth.
However, price gains were somewhat limited by the International Energy Agency’s prediction that global oil demand will grow at its slowest pace in five years by 2025. Additionally, the World Trade Organization downgraded its forecast for global merchandise trade, warning that the ongoing U.S.-China trade war, along with rising tariffs, could result in the largest slump since the peak of the COVID-19 pandemic.
Oil prices have fallen approximately 13% this month due to concerns over escalating tariffs and increasing output from OPEC+ countries, including Russia. U.S. tariffs on Chinese goods have led to retaliatory measures from Beijing, adding to the pressure on 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 continue through the year due to the ongoing trade tensions between the two largest economies.
