Oil prices edged higher in early Asian trading on Monday, buoyed by weekend signals that the United States and China may be stepping back from the brink of an escalating trade war that threatened to undermine global economic growth and energy demand.
Brent crude futures, the international benchmark, advanced 47 cents to settle at $66.41 per barrel by 0629 GMT, representing a 0.71% gain. Meanwhile, U.S. West Texas Intermediate crude climbed 44 cents, or 0.72%, to $61.94 a barrel. The modest gains followed a robust previous week in which both benchmarks surged 8.9% and 7.7% respectively, propelled by stringent new Western sanctions targeting Russian oil producers.
The cautiously optimistic tone in energy markets reflects a broader recalibration of expectations among traders and analysts, who had spent much of October grappling with concerns about crude oversupply and weakening demand from the world’s largest oil-consuming nations.
Framework Agreement Emerges
The catalyst for Monday’s price movement came Sunday evening when U.S. Treasury Secretary Scott Bessent revealed that American and Chinese negotiators had hammered out what he characterized as a “very substantial framework” for resolving the contentious trade disputes between the two economic superpowers.
According to Bessent, the preliminary agreement would pave the way for direct discussions between President Donald Trump and Chinese President Xi Jinping as early as this week. Critically, the framework appears designed to avert the imposition of 100% tariffs on Chinese goods—a threat that had hung over markets like a sword of Damocles—while also securing a postponement of China’s controversial rare-earth export restrictions.
President Trump himself struck an upbeat tone in separate remarks Sunday, expressing confidence that a comprehensive deal would materialize. “I think we’re going to have a deal with China,” Trump declared, adding that he anticipated holding meetings both in China and on American soil, potentially at the White House or his Mar-a-Lago resort in Florida.
Market Psychology Shifts
The diplomatic developments have prompted a notable shift in market sentiment, according to industry observers. Shanghai-based Haitong Securities noted in a client briefing that trader expectations have brightened considerably, driven by the twin factors of tightening Russian supply and the thawing of U.S.-China tensions.
“Market expectations have improved following new sanctions on Russia and the easing of U.S.-China tension, countering concern about crude oversupply that had driven prices down earlier in October,” the firm stated.
Tony Sycamore, a market analyst at brokerage IG, emphasized that the trade framework helps address lingering anxieties about how effectively new U.S. sanctions targeting Russian oil giants Rosneft and Lukoil would constrain Moscow’s crude exports. There had been widespread concern that Russia might simply circumvent the restrictions by offering steeper price discounts and deploying so-called “shadow fleets”—aging tankers operating outside traditional insurance and regulatory frameworks—to maintain market access.
Cautious Notes Amid Optimism
Despite the positive momentum, market watchers are maintaining a measured outlook. Haitong Securities analyst Yang An warned that the sustainability of the current price rally remains contingent on the actual effectiveness of sanctions enforcement.
“However, if sanctions on Russian energy are less effective than expected, oversupply pressures could return to the market,” Yang cautioned, underscoring the delicate balance oil markets currently face.
The coming days will prove critical as traders assess whether the U.S.-China framework translates into substantive progress and whether Western sanctions genuinely curtail Russian oil flows. For now, energy markets are pricing in hope rather than certainty—a familiar pattern in the perpetually volatile world of crude oil trading.
With both major economies signaling willingness to compromise, the oil market’s trajectory may ultimately depend less on supply mechanics and more on whether Washington and Beijing can transform their “substantial framework” into a lasting commercial détente.
WHAT YOU SHOULD KNOW
Oil prices rose on Monday on renewed optimism that the U.S. and China are close to a trade deal, easing fears of weakened global demand from the world’s two largest oil consumers. While the diplomatic breakthrough and recent sanctions on Russian oil have lifted market sentiment, analysts warn that prices could slip again if Russian crude continues flowing through discounted sales and shadow fleets.
Oil markets are betting on diplomacy over supply disruptions, but the rally’s sustainability hinges on whether the U.S.-China framework delivers concrete results and Russian sanctions prove genuinely effective.
