Oil prices are on track to post a weekly gain amid expectations that the first U.S. trade deal post-tariffs, with the UK, could signal a thaw in the tense trade relations ahead of the U.S.-China talks this weekend. As of 9:45 a.m. EDT on Friday, May 9, 2025, the front-month U.S. benchmark futures, WTI Crude, were up by 0.92% at $60.42. The international benchmark, Brent Crude, was rising by 0.80% at $63.31. After posting a weekly loss last week, oil was on track early on Friday for a weekly gain this week, following the announcement of a trade deal between the U.S. and the UK on Thursday.
U.S. President Donald Trump announced the landmark U.S.-UK trade deal, calling it a "breakthrough" with one of America’s "most cherished allies." The agreement is set to drive billions of dollars in export opportunities for both nations. Under the agreement, the U.S. will eliminate its 25% tariffs on UK steel and aluminum imports, easing costs for British manufacturers. With one deal done, the market will now be watching the beginning of tentative trade talks between the United States and China, scheduled to start in Geneva, Switzerland, on Saturday, May 10, 2025.
U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer will meet China’s Vice-Premier He Lifeng in Geneva. Trade tensions have somewhat cooled before the trade talks, and the commodities sector has taken notice. “Following a challenging April, the commodities sector has been finding its feet again, with early May action driving a 1.4% gain, led by pro-cyclical and growth-dependent sectors,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said in a commentary on Friday.
Risks of a slowdown in the U.S. shale patch have also supported oil prices this week. “Sub-$60 WTI threatens profitability, with top producers cutting spending and signs that production growth is stalling,” Hansen noted. Yet, the upside to oil prices is being capped by the OPEC+ plan to continue boosting production by more than previously expected.
In early European trading on Friday, Brent crude futures were up 0.7%, trading at $63.28 a barrel, while West Texas Intermediate futures climbed 0.6%, hitting $60.25 a barrel. The upcoming trade talks are set to take place over the weekend, with both sides hoping for progress. Derren Nathan, head of equity research at Hargreaves Lansdown, mentioned, "[US president] Donald Trump’s hinted there may be some scope to reduce the 145% border tax on Chinese goods if discussions go well. So far, the measures haven’t done huge damage to China’s economy."
Data released on Friday showed that exports from China grew by 8.1% in April, which was higher than the 1.9% expected, though shipments to the U.S. were down 21%. Imports from America fell 4.7%, reflecting the 125% tariff imposed by Beijing. The trade deal between the UK and U.S. announced on May 8 boosted investor sentiment, with the FTSE 100 opening higher on Friday morning.
The pact is the first for Trump's administration since he announced sweeping tariffs on what he dubbed "Liberation Day" on April 2, 2025. Under the deal, U.S. tariffs on British cars fall to 10% for the first 100,000 vehicles exported to the U.S. Trump had originally placed import taxes of 25% on cars and car parts coming into the U.S. on top of the existing 2.5%. U.S. tariffs on UK steel were also scrapped as part of the agreement, and in return, the UK will reduce tariffs on U.S. products, including beef and ethanol. However, the 10% blanket levy that Trump announced last month still applies to most imports of UK goods.
As oil prices were little changed early on Friday after rising more than 3% in the previous session, Brent crude rose 7 cents, or 0.1%, to $62.91 a barrel, while U.S. West Texas Intermediate crude was up 7 cents, or 0.1%, at $59.98 a barrel. On Thursday, Brent settled up 2.8% at $1.72 and WTI rose 3.2% to $1.84. U.S. Treasury Secretary Scott Bessent's meeting with China’s top economic official, Vice Premier He Lifeng, aims to work toward resolving trade disputes that have threatened growth in the consumption of crude oil.
Separately, U.S. President Donald Trump and British Prime Minister Keir Starmer announced that Britain had agreed to lower tariffs on U.S. imports to 1.8% from 5.1%. The U.S. cut duties on British cars but left a 10% tariff on most other goods. Elsewhere, the Organization of the Petroleum Exporting Countries and allies - or OPEC+ - plan to increase output, which could keep pressure on oil prices. A Reuters survey found OPEC oil output edged lower in April as production declines in Libya, Venezuela, and Iraq outweighed a scheduled increase in output.
Tighter U.S. sanctions on Iran could restrict supply and push prices higher. Sanctions on two small Chinese refiners for buying Iranian oil made it difficult for them to receive crude and led them to sell their product under alternative names. As oil markets react to the shifting trade landscape, traders remain cautiously optimistic about the potential for easing tensions and the impact on prices in the coming weeks.
