Oil prices hovered near recent highs on Tuesday as traders closely monitored ongoing trade negotiations between the United States and China—talks seen as critical to global economic momentum and future oil demand. Brent crude edged down 17 cents to settle at $66.87 a barrel, while U.S. West Texas Intermediate (WTI) slipped 31 cents to $64.98.
The modest pullback followed Monday’s rally that saw Brent hit its highest level since April 22 and WTI reach a peak not seen since April 3. Markets remain optimistic that a trade breakthrough between the world’s two largest economies could bolster risk appetite and fuel demand recovery.
U.S. Commerce Secretary Howard Lutnick said discussions with Chinese officials were progressing and could wrap up by Tuesday night, though they might extend into Wednesday. Meanwhile, the World Bank cut its 2025 global growth forecast to 2.3%, citing tariffs and economic uncertainty as significant headwinds.
On the supply front, Saudi Aramco plans to ship 47 million barrels to China in July—1 million fewer than in June—signaling that OPEC+ supply increases may be more restrained than expected. OPEC+ has planned a July output increase of 411,000 barrels per day as part of its continued rollback of production cuts, though a Reuters survey showed May’s increase was limited, with Iraq underproducing and Gulf states falling short of their allowed hikes.
Geopolitical risks also remain in focus. Iran signaled a counter-proposal to a recent U.S. nuclear deal offer, but both sides remain divided, especially over uranium enrichment rights. A deal could increase Iranian oil exports, adding downward pressure on prices. At the same time, the European Commission announced a fresh package of sanctions on Russia, targeting energy revenues and likely limiting Russian oil on the global market.
Finally, attention turns to U.S. inventory data. Analysts forecast a 2 million-barrel draw from U.S. stockpiles for the week ending June 6, marking a third consecutive weekly decline. If confirmed by the American Petroleum Institute and the Energy Information Administration, the drawdown would contrast with seasonal averages and support near-term pricing.