Oil Prices Climb to 7-Week High Amid US-China Trade Progress and Iran Tensions

Oil Prices Hit 7-Week Peak on Trade Optimism and Middle East Tensions

Oil prices surged on Wednesday, reaching their highest levels in nearly two months as markets reacted to developments in US-China trade negotiations and heightened geopolitical risks surrounding US-Iran relations.


Key Price Moves (as of 10:28 GMT)

  • Brent Crude: Up $0.82 or 1.2%, to $67.69 per barrel

  • WTI Crude (US): Up $0.96 or 1.5%, to $65.94 per barrel

These increases mark a significant rebound in global oil benchmarks, driven by reduced downside risk in trade and mounting supply uncertainty in the Middle East.


US-China Trade Truce Back on Track

According to US Commerce Secretary Howard Lutnick, US and Chinese officials reached a framework agreement in London to reestablish their trade truce. The talks also reportedly covered China’s export controls on rare earths, which are critical to global manufacturing.

This has temporarily eased fears of a trade-related demand slowdown, especially as the two countries remain the top global consumers of oil.

“Trade-related downside risk in oil has been temporarily removed,” said Tamas Varga of PVM Oil Associates, noting that markets are still unsure how global economic growth will evolve.


Geopolitical Pressure: Iran Threatens US Bases

Adding further support to oil prices, tensions between the US and Iran escalated, with Iranian officials threatening US military bases in the region amid stalled nuclear negotiations.

US President Donald Trump expressed doubt over Iran’s willingness to halt uranium enrichment, a critical sticking point in renewing the nuclear deal.

Any signs of potential conflict or supply disruption in the Middle East—particularly around the Strait of Hormuz—tend to boost oil prices due to risk premiums.


Supply Outlook: OPEC+ to Boost Output in July

OPEC+ announced plans to increase production by 411,000 barrels per day in July, marking the fourth straight month of incremental supply restoration. Yet analysts say domestic demand within OPEC+ economies, particularly Saudi Arabia, could absorb much of the additional output.

“Greater oil demand within OPEC+ economies could offset additional supply and support prices,” said Hamad Hussain from Capital Economics.


US Crude Inventory Data in Focus

Market sentiment will also be shaped by official weekly inventory data from the US Energy Information Administration (EIA). Preliminary figures from the American Petroleum Institute (API) on Tuesday showed a 370,000-barrel decline in US crude stocks last week.

A larger-than-expected draw could reinforce bullish sentiment, indicating strong domestic consumption or tightening supply.


Market Outlook: Volatility Ahead

Oil traders are navigating a complex web of factors:

  • Macro optimism from easing trade tensions

  • Geopolitical risk premiums driven by Iran’s threats

  • Seasonal and structural demand from key producers

  • Tight US inventories supporting short-term prices

While oil has gained ground, analysts warn that further clarity on global demand and OPEC+ supply coordination will be needed to maintain upward momentum.

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