Morning Highlights:Oil Jumps Over 3% as U.S. and China Slash Tariffs to Defuse Trade War

Market Snapshot (as of 06:10EST):

🔺 Brent: $65.71/b (+1.82)

🔺 WTI: $62.85/b (+1.84)

📈 Last week: Brent and WTI both posted +4% for their first weekly gain since mid-April

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📉 Today’s Market Themes:

• U.S. and China agree to pause tariff escalation for 90 days

• Markets rally as fears of global trade decoupling ease

• Brent and WTI surge past $63 amid bullish sentiment

• OPEC+ output plans and Iran nuclear talks cap upside

• Hedge funds boosted bullish gasoline bets to a 5-week high and increased bearish diesel bets to a 20-week high, according to CFTC data published Friday

• The US and its allies are considering new measures against Russia, including restrictions on oil tankers and "bone-crushing" sanctions, such as a 500% tariff on imports from countries that buy Russian energy products.

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📰 Key Drivers:

🔸 Major Trade Breakthrough Lifts Oil

Oil markets soared after the U.S. and China jointly announced a temporary suspension of new tariffs, cutting rates significantly for 90 days. The U.S. will lower tariffs on Chinese goods from 145% to 30%, while China will cut duties on U.S. imports from 125% to 10%.

“We concluded that we have a shared interest,” said U.S. Treasury Secretary Scott Bessent at the weekend press conference in Geneva.

This announcement followed positive trade talks over the weekend and comes just days after a U.S.-UK trade deal reignited investor confidence.

🔸 Demand Outlook Improves

With trade tensions easing between the world’s two largest oil consumers, investors are revising up demand forecasts. Analysts say the removal of tariff headwinds could restore cross-border trade volumes, particularly in sectors like industrials and transport fuels.

🔸 OPEC+ Adds Supply — But Output Slips in April

While OPEC+ is still planning to ramp up output in May and June, a Reuters survey showed OPEC output unexpectedly edged lower in April, helping tighten balances short-term. Still, additional barrels from Saudi Arabia and allies remain a downside risk going into summer.

🔸 Iran Nuclear Talks Continue

U.S. and Iranian negotiators wrapped a new round of nuclear talks in Oman on Sunday. Officials say more rounds are planned, but Tehran’s insistence on continuing uranium enrichment remains a sticking point.

A deal could bring more Iranian crude back to global markets, which would pressure prices further, though any timeline is still uncertain.

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📢 Analyst Commentary:

Toshitaka Tazawa, Fujitomi Securities: “OPEC+ output hikes will cap oil’s upside, but the macro picture has improved significantly.”