Oil Prices Rises as US-China Agree Framework for Trade Deal
Oil prices rise during early hours on Monday as the US and China have agreed on a framework for a trade deal just days before Donald Trump and Chinese President Xi Jinping are due to meet.
Treasury Secretary Scott Bessent said the agreement, forged on the sidelines of the Association of Southeast Asian Nations (Asean) summit in Malaysia on Sunday, would remove the threat of the imposition of 100% tariffs on Chinese imports starting on 1 November and include “a final deal” on the sale of TikTok in the US.
Trump arrived in Malaysia on Sunday for the summit, his first stop in a five-day Asia tour that is expected to culminate in a face-to-face with Xi in South Korea on Thursday.
Brent crude was trading at $65.42 per barrel at 10.09 a.m. local time (0709 GMT), up 0.34% from the previous close of $65.20. US benchmark West Texas Intermediate (WTI) also rose 0.37% to $61.73, compared to $61.50 in the prior session.
The trade talks, led by Chinese Vice Premier He Lifeng and US Treasury Secretary Scott Bessent, took place on October 25-26 in Malaysia’s capital, Kuala Lumpur.
Following the sessions, both sides reported they had reached a framework for US President Donald Trump and Chinese President Xi Jinping to discuss in South Korea on Thursday. Expectations of a US Federal Reserve (Fed) rate cut also supported oil prices.
US Consumer Price Index (CPI) data, delayed by the federal government shutdown, came in below forecasts, boosting market bets that the Fed will cut interest rates by 25 basis points at its October 28-29 meeting and continue easing in December.
Meanwhile, concerns persist over the impact of US sanctions on Russia’s oil sector.
The U.S. Department of the Treasury’s Office of Foreign Asset Control (OFAC) recently imposed sanctions on Rosneft and Lukoil, Russia’s two largest oil producers.
The sanctions is expected to freeze U.S. assets, restrict dollar transactions, and extend to several subsidiaries, and effectively isolate both firms from Western financing and trade channels.
This could impact Russia’s economic stability as Oil and gas exports (which account for over a third of Russia’s federal budget), are now subject to deeper external constraints, limiting foreign exchange inflows.
Global markets reacted swiftly as Brent crude rose +4-6% after the announcement due to traders pricing in potential disruptions to Russian exports. The resulting contraction in Russian export volumes could tighten global oil supply in the near term.
U.S. is expected to maintain strict enforcement, potentially extending secondary sanctions to global intermediaries that facilitate Russian crude trade.
Russia will likely attempt to reroute exports through non-Western channels, but logistical, insurance, and financing constraints limit its ability to fully offset lost Western demand.
As a result, the sanctions are expected to tighten global oil balances modestly through Q4 2025, keeping prices elevated into early 2026.
Analysts remain cautious, noting that Russia has historically circumvented such restrictions, while market attention focuses on whether major Russian oil buyers, including India and China, will yield to US pressure. Ikeja Hotel Grows Profit by 285%, Announces Interim Dividend
