- United States and China Reach Agreement to Temporarily Lower Tariffs, Leading to Surge in Oil Prices
- WTI and Brent Crude See Significant Increases as Market Reacts Positively to Trade Tensions Easing
- Discussions to Address Economic and Trade Relations Between U.S. and China Will Continue After Tariff Suspension
Oil prices jumped by 3% early on Monday following the announcement that the United States and China have agreed to reduce tariffs on each other’s products, alleviating concerns about global trade and the economy.
At 6:52 a.m. on Monday, WTI Crude was up by 3.13% at $62.93, while Brent Crude traded at $65.79, up by 2.93% on the day.
The market awaited the outcome of the initial U.S.-China trade talks in Geneva over the weekend.
The U.S. and China will lower tariffs by 115% temporarily, with an additional 10% tariff being retained. Other U.S. measures will remain in place.
Both countries agreed to suspend tariffs for 90 days, with the exception of the 10% baseline rate.
“After taking the aforementioned actions, the Parties will establish a mechanism to continue discussions about economic and trade relations,” the United States and China said in a joint statement at the end of the talks in Geneva.
He Lifeng, Vice Premier of the State Council of China, U.S. Treasury Secretary Scott Bessent, and U.S. Trade Representative Jamieson Greer will continue future discussions.
“Crude oil jumps together with other pro-cyclical commodities on news the U.S. and China will temporarily lower tariffs on each other’s products, thereby reducing fears of a prolonged economic fallout hurting demand,” commented Ole Hansen, head of commodity strategy at Saxo Bank.
“WTI and Brent may take a closer look at key resistance near $65 and $69, respectively. However, the key question is whether today’s news marks peak optimism, given the low likelihood of a full U.S. retreat from its stance on China,” noted the strategist.
The rise in oil prices was mirrored by the equity markets, with the also surging as a result of the U.S. and China’s decision to lower tariffs.