May 16, 2025 (MarketLine via COMTEX) --
There was an overall increase in crude oil prices this week after the US and China held productive talks to find a solution over their disagreement on import tariffs. It yielded in a temporary reduction in tariffs on each otheraEUR(TM)s imported goods, thereby easing the worries over a trade slowdown among the two worldaEUR(TM)s largest economies. Additionally, a dip in the US inflation gave additional support to prices during the week. Elsewhere, the US sanctioned several entities linked to shipping Iranian crude oil to China, lending further support to prices. However, the gains in prices were somewhat contained on expectations of Iran reaching a nuclear deal with the US, which would have seen its sanctions getting lifted.
Some key factors that led to changes in crude oil prices this week are as follows:
Oil prices rose on Monday and extended gains on Tuesday, supported by prospects of a surge in US-China trade after the two countries lowered their respective import tariffs by 115% for a duration of 90 days. Back in April 2025, the US had lifted its tariffs on imports from China to 145% while the latter had reciprocated with rates to 125%. Following the successful conclusion of bilateral talks over the past weekend, the new US tariffs on Chinese goods now stand at 30% while the latter will levy 10% on goods from the US. Prices were also buoyed by US inflation for April 2025, which had grown annually at 2.3% year-on-year. This was slightly better than the 2.4% registered in the previous month and the lowest in around four years.Oil prices dipped on Wednesday, weighed down by a large weekly crude inventory build in the US, thereby raising worries over a demand slowdown amid tariff disagreements with some of the country’s key trading partners. According to the US Energy Information Administration (EIA), crude stockpiles in the country expanded by around 4 million barrels for the week ending on May 9, 2025. However, the fall in prices was contained to a large extent by additional US sanctions on entities involved in the export of crude oil from Iran. The latest sanctions from the US Treasury Department targeted around 20 companies and their affiliates for aiding the shipment of Iranian crude oil to China.Oil prices fell on Thursday, weighed down by prospects of a US-Iran nuclear deal after the two countries made further progress in this regard during recent discussions. The US President Trump hinted that an agreement was near while an Iranian representative stated that most of the deal conditions were largely acceptable and expected the rollback of sanctions in exchange. This would see Iran resuming its crude oil exports to global markets at full capacity, potentially causing an oversupply. Apparently, the market was already facing prospects of surplus crude in 2025 and 2026, as per the International Energy Agency (IEA). It made upward revision to its global supply outlook in the latest monthly report by 380,000 barrels per day (bpd) due to the proposed output hike from the OPEC+ group, which put additional pressure on oil prices. Oil prices rose on Friday, supported by renewed signs of global economic growth after the US and China announced significant cuts to reciprocal tariffs earlier in the week. Prices also received support from declining drilling and completion activities in the US, primarily due to breakeven concerns across the shale plays. As per the Baker Hughes data, the number of oil rigs in the country was down by one for the week ending on May 16, 2025. On an annual basis, the count had dropped by 24, indicating a notable contraction in drilling activity across the US oil fields.
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COMTEX_465734016/2227/2025-05-23T18:06:33
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