Oil prices bounced back on Monday, gaining nearly 1% after a sharp selloff in the previous session, as investors grew cautiously optimistic that potential talks between US President Donald Trump and Chinese President Xi Jinping could ease escalating trade tensions between the world’s two largest economies—and biggest oil consumers.
Brent crude futures rose 87 cents, or 1.39%, to $63.60 a barrel by 00:45 GMT, recovering from a 3.82% drop on Friday that pushed prices to their lowest level since May 7. Similarly, US West Texas Intermediate (WTI) crude climbed 87 cents, or 1.48%, to $59.77 a barrel, after falling 4.24% in the previous session to also hit a five-month low.
The rebound follows a turbulent week marked by renewed US-China trade hostilities. China recently expanded its export controls on rare earth materials, prompting a swift reaction from Washington. On Friday, President Trump announced 100% tariffs on Chinese exports bound for the US, along with new export controls on “any and all critical software,” set to take effect November 1.
Despite the tensions, markets are holding out hope for diplomatic progress. A potential Trump-Xi meeting on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in South Korea later this month could offer a path toward easing trade friction.
“The key question for markets is whether these measures will actually be implemented—with severe consequences for global supply chains and high-tech industries—or whether they’re simply negotiating tactics ahead of the APEC meeting,” Goldman Sachs analysts said in a note.
Goldman Sachs added that the most likely outcome could be a mutual step back from extreme policies, possibly extending the tariff escalation pause reached in May. Still, analysts warned of lingering risks, noting that “trade tensions could flare up again, leading to higher tariffs or export restrictions, at least temporarily.”
Oil prices have been sensitive to geopolitical developments in recent months. During previous surges in US-China trade disputes earlier this year, global oil markets saw similar volatility, with prices tumbling in March and April.
Meanwhile, in the Middle East, geopolitical shifts also played into market sentiment. President Trump announced Sunday that the Gaza war has ended, as he prepared to travel to Israel for the anticipated release of Israeli hostages and Palestinian prisoners—part of a fragile ceasefire agreement he helped broker.
The combination of renewed trade diplomacy and tentative peace efforts has injected a cautious sense of optimism into global markets, though traders remain wary of potential disruptions to supply chains and geopolitical instability in key oil-producing regions.