Global oil prices climbed to a near two-month high on Wednesday amid renewed optimism over U.S.-China trade talks and rising geopolitical risks linked to Iran.
The market responded to comments by U.S. President Donald Trump indicating that a preliminary agreement had been reached with China, boosting investor sentiment and lifting crude benchmarks.
Brent crude oil, against which Nigerian oil is priced, gained $1.15 or 1.7% to trade at $68.02 per barrel by 01:49 p.m. in Nigeria, while U.S. West Texas Intermediate (WTI) crude rose $1.31 or 2% to $66.29 per barrel.
WTI touched its highest level since early April, reflecting a combination of supportive factors across the global energy landscape.
In a statement on Wednesday, President Trump said that Beijing had agreed to increase supplies of rare earth minerals and magnets to the United States, and in exchange, the U.S. would allow Chinese students to continue attending its universities.
He clarified that the deal was subject to final approval by both himself and Chinese President Xi Jinping.
“The trade-related downside risk in oil has been temporarily removed,” said Tamas Varga, an analyst at PVM Oil Associates. “However, the reaction has been somewhat tempered, as the broader impact on global growth and oil demand remains unclear.”
Market participants have viewed the U.S.-China agreement as a potential turning point in months-long trade tensions that have slowed global economic activity and energy demand.
If finalized, the deal could boost trade flows, manufacturing output, and ultimately fuel consumption in both economies.
Meanwhile, geopolitical concerns in the Middle East remain elevated, providing further support to oil prices. President Trump expressed skepticism about Iran’s willingness to halt uranium enrichment as part of renewed nuclear negotiations.
In response, Iranian officials threatened retaliatory action, including potential strikes on U.S. bases in the region if talks fail and conflict emerges.
These developments reinforce expectations that Iranian crude exports will remain constrained under current U.S. sanctions, limiting global supply.
Despite the geopolitical backdrop, oil supply is set to increase modestly as OPEC+ moves ahead with plans to boost production by 411,000 barrels per day (bpd) in July. This marks the fourth consecutive monthly output hike as the alliance gradually unwinds pandemic-era production cuts.
However, analysts at Capital Economics suggest that rising domestic demand among OPEC+ members — particularly in Saudi Arabia — could offset the additional barrels, keeping the market tight through the summer months.
“Greater oil demand within OPEC+ economies could support prices despite planned production increases,” said Hamad Hussain, commodities analyst at Capital Economics.
On the macroeconomic front, data from the U.S. showed consumer prices increased less than expected in May, strengthening expectations that the Federal Reserve may begin cutting interest rates by September.
Lower rates typically boost economic activity, which in turn supports energy demand.
Traders are also monitoring U.S. crude inventories ahead of the Energy Information Administration’s (EIA) official report. Preliminary data from the American Petroleum Institute (API) on Tuesday indicated a decline of 370,000 barrels in U.S. crude stocks last week, a figure that, if confirmed, could lend additional momentum to prices.
The outlook for crude remains cautiously optimistic, with prices supported by easing trade risks, geopolitical uncertainty, and favorable demand expectations.
However, market volatility is expected to persist as investors assess the durability of the U.S.-China negotiations, the pace of global recovery and the evolving supply dynamics from major producers.
The EIA inventory data due later Wednesday, along with updates on the China-U.S. trade deal and Iran’s nuclear discussions, will likely set the tone for crude markets in the coming sessions.
