Oil Cools With Focus Shifting From Trade to Sanctions Impact
(Bloomberg) — Oil eased back following the biggest weekly increase since June as traders weighed progress between the US and China on trade, and the wider outlook for supply after sanctions on two of Russia’s largest producers.
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Brent erased an earlier gain to trade lower after adding more than 7% last week. Top negotiators said they came to terms on a range of points, setting the table for President Donald Trump and counterpart Xi Jinping to finalize a trade deal. The leaders will meet on Thursday.
Trump’s threat of 100% tariffs on Chinese goods “is effectively off the table,” Treasury Secretary Scott Bessent told CBS News. The US and China are the world’s largest economies, and moves to defuse trade tensions that have rattled global markets would be a positive for economic growth.
Oil rebounded from a five-month low last week after US sanctions on Russia’s two biggest crude producers helped to counter the narrative of a building global surplus. The move came after traders had amassed record bearish bets on the global benchmark, anticipating oversupply.
Still, with the OPEC+ alliance continuing to add barrels, and some members including Kuwait suggesting there could be further increments, the concerns about a glut remain.
The US administration’s plan in sanctioning Rosneft PJSC and Lukoil PJSC, part of broader efforts to force an end to the war in Ukraine, is to make Russia’s trade harder, costlier, and riskier — but without forcing a sudden supply shock that might spike prices, according to officials familiar with the matter.
“Strong growth of production coming from Americas, plus the weaker demand of oil, means downward pressure,” International Energy Agency Executive Director Fatih Birol told Bloomberg Television. A China-US trade deal “may give a slight boost to the oil price. But in general, I expect rather moderate prices.”
—With assistance from John Deane.
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