US‑China tariff reductions drive oil prices higher
The USA and China have decided to significantly reduce mutual tariffs, which has affected oil prices. Reuters noted that the commodity is becoming more expensive on world exchanges by several percent due to investors' expected increase in demand.
The weekend in Geneva was dominated by trade negotiations between China and the United States. On Monday, May 12, the details of the agreement were announced. The USA decided that for a period of 90 days, they will lower tariffs on Chinese goods to 30% from 145%. Meanwhile, the People's Republic of China will reduce tariffs on American goods to 10% from 125% over the same period.
Following this announcement, the dollar began to strengthen, and stock markets turned positive. The easing of the trade war between the USA and China also impacted the oil market.
The commodity is becoming more expensive because investors expect higher demand for fuels with the unlocking of US-China trade. Reuters reported before noon that on Monday, the price of Brent crude oil rose by $2.03 to $65.94 (an increase of 3.18%) per barrel, while West Texas Intermediate (WTI) increased by $2.06 to $63.08 (an increase of 3.38%).
"Both benchmarks increased more than $1 on Friday and gained over 4% last week, notching their first weekly gains since mid-April, after a U.S. trade deal with the United Kingdom made investors optimistic that economic dislocations from U.S. tariffs on its trading partners may be avoided," Economic Times recalls.
