On May 13, 2025, Deutsche Bank’s commodity analyst, Carsten Fritsch, highlighted the positive impact of a significant reduction in tariffs between the U.S. and China. This unexpected announcement led to a notable rise in oil prices, with Brent crude soaring by 4% to surpass $66 per barrel, while West Texas Intermediate (WTI) crude rose to $63.60 per barrel.
Impact of U.S.-China Trade Talks on Oil Prices
There had been optimism ahead of the trade negotiations that took place over the weekend, which led to a strong surge in oil prices last Friday. The agreement between the U.S. and China to reduce tariffs for an initial 90-day period triggered these price increases. Starting the following day, the U.S. will impose a 30% tariff on goods imported from China, while China will apply a 10% tariff on U.S. goods. Notably, China’s 10% tariff on U.S. crude oil, which was introduced in February in retaliation for previous U.S. tariffs, is likely to remain in place.
The easing of trade tensions reduced the risk to oil demand, but it remains crucial to reach a long-term resolution over the next three months. This resolution would ideally involve increasing China’s imports of U.S. crude oil. Additionally, the increase in oil prices led to a slight rise in the spot premium of Brent crude futures.
The price difference between the first two futures contracts once widened to 50 cents. Furthermore, the first six contracts are now priced higher, reflecting a spot premium. Last week, only the first four contracts had this premium. Despite these developments, the fact that OPEC+ has significantly increased supply remained sidelined. This may have contributed to the slight drop in oil prices, as Brent crude retreated to $65 following initial price excitement.
As the excitement over the trade truce begins to fade, market observers are paying close attention to whether the tariff reductions will lead to lasting stability in oil prices. There is hope that the agreement will pave the way for further cooperation between the U.S. and China, especially in terms of energy trade, which could potentially benefit global oil markets.
This analysis underlines the importance of resolving the trade conflict, as the oil market, heavily influenced by both nations, continues to face uncertainty. The market’s response to these developments could shape oil prices in the coming months, depending on whether a permanent solution is achieved.
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