Oil Rallies as Trump Doubts Iran Talks, Sees China Deal ‘Done’
Oil prices rallied as US President Donald Trump signaled skepticism over talks with Iran and confidence in a trade deal with China.
West Texas Intermediate rose as much as 2.3% to the highest since early April. Trump told the New York Post he’s “less confident” about whether he can convince Tehran to agree on shutting down its nuclear program.
Earlier, Iranian Foreign Minister Abbas Araghchi said a nuclear deal was “within reach” and could be “achieved rapidly.”
Further bolstering futures, US inflation data also came in below estimates, weighing on the dollar, which makes raw materials priced in the currency more appealing.
“Oil prices jumped on comments from US President Trump that downplayed the potential for a near-term nuclear deal with Iran,” said Jens Naervig Pedersen, a strategist at Danske Bank. “The comments add to the recent sentiment boost in the oil market from progress in trade talks and potential for tighter sanctions on Russia.”
Trump also posted on social media that a trade deal with China was “done,” subject to the approval of President Xi Jinping. The agreement would still see some tariffs between the two nations, he said, without elaborating. Global markets swung after the comments.
Crude has dropped this year as trade concerns hurt the appetite for risk assets, including commodities. At the same time, OPEC+ has moved to restore idled capacity at a faster-than-expected pace, boosting concerns about a glut later this year. Prices have recovered in recent sessions, supported by easing trade tensions and the outlook for summer demand.
A monthly report from the US Energy Information Administration underscored the oil market’s current uncertainties. While the agency expects supply to eclipse demand by 800,000 barrels a day this year, the most since it began publishing a forecast for 2025, it also doesn’t see US crude production topping last month’s levels before the end of next year, a sign that lower prices are curbing some supply.
An industry estimate, meanwhile, projected that US crude inventories fell by about 400,000 barrels last week. The drawdown would be the third decline in a row, if confirmed by official data later Wednesday.
Signs of market tightness have also appeared along the futures curve.
Earlier this week, the February-March WTI spread flipped to backwardation — where near-term prices are higher than longer-dated ones — for the first time since April, with several subsequent months following suit earlier today, signaling concerns about oversupply are easing.
Source: Bloomberg
