Oil prices are on the rise again, but not by much. While a temporary truce in the U.S.–China trade war lit a spark under global markets this week, investors in the oil sector aren’t breaking out the champagne just yet.
Why? Because despite the positive signals from global trade, there’s a growing wave of supply from OPEC+ and a fair bit of market skepticism about whether this trade “pause” will actually stick.
Brent and WTI Climb, but Not by Much
As of Tuesday, Brent crude futures were up around 1% at $65.61 a barrel, and U.S. West Texas Intermediate (WTI) climbed 1.2% to $62.67. That’s a nice bump, but it is modest compared to Monday’s energy-fueled excitement that saw prices soar over 4%.
Well, the trade news helped, but it’s not the whole story.
The U.S.–China Trade Truce is a Short-Term Lift
Markets initially surged after Washington and Beijing announced a 90-day suspension of their escalating tariff war, with both sides slashing import duties significantly. This helped lift Wall Street, boost the dollar, and yes, push oil prices higher.
But investors are already asking: Is this a real breakthrough, or just a breather?
PVM analyst Tamas Varga summed it up well: “The market is now evaluating the impact of the trade truce.” Translation? The high-fives have paused. We’re back to caution mode.
OPEC+ Supply Surge Adds Pressure
Another big piece of the puzzle: OPEC+ is ramping up oil production, and fast. Since April, output has increased more than expected.
In May 2025 alone, production is expected to rise by 411,000 barrels per day. That’s a lot of crude flooding into the market.
Saudi Arabia, a key player in OPEC+, is keeping its crude exports to China steady in June after hitting a one-year high in April. Meanwhile, Russia remains China’s top supplier.
This added supply is putting a cap on just how high prices can go, even with positive trade news in play.
Fuel Demand Looks Strong, But Refining Bottlenecks Remain
Refined fuel demand is holding up. Despite crude prices dropping roughly 22% since their January peak, refined products like gasoline and diesel are doing just fine. In fact, refining margins remain stable, according to analysts at JPMorgan.
Why? Because of reduced refining capacity, particularly in the U.S. and Europe. With less capacity to process crude oil into usable fuel, there’s a tighter supply of end-products, meaning markets are more vulnerable to price swings during outages or maintenance.
In short, even if crude prices stay soft, fuel prices could remain elevated due to a more fragile refining system.
