Crude oil futures jumped more than 2% on Monday, after the U.S .and China agreed to slash tariffs, easing trade tensions between the world’s two largest petroleum consumers.
U.S. crude oil was up $1.44, or 2.36%, to $62.46 per barrel by 11:26 a.m. ET. Global benchmark Brent rose $1.41, or 2.21%, to $65.32 per barrel. Prices jumped about 4% earlier in the session.
Washington and Beijing agreed over the weekend in Switzerland to slash sky-high tariff rates by 115%, U.S. Treasury Secretary Scott Bessent said Monday. The lower tariff rate will remain in place for 90 days as the world’s two largest economies continue to negotiate, Bessent said.
“I would imagine in the next few weeks we will be meeting again to get rolling on a more fulsome agreement,” Bessent said on CNBC’s “Squawk Box.”
U.S. tariffs on Chinese imports now stand at 30%, while Beijing’s tariffs on American goods are now 10%. The previous rates had effectively amounted to a trade embargo, Bessent said previously.
Oil prices had plunged to the lowest level in four years earlier this month as President Donald Trump’s global tariff regime raised the risk of a recession that would slow demand. At the same time, OPEC+ has agreed to rapidly increase supply to the market this month and the next.
Oil prices are down more than 12% so far this year.
Low prices are pressuring U.S. shale oil producers, who generally need crude prices at $65 per barrel to drill new wells profitably. Diamondback Energy executives told investors last week that U.S. production will likely peak and start to decline if crude does not bounce back.
Diamondback needs U.S. crude prices in the mid- to high $60s and on a path to $70 for production to grow, the company’s President Matthew Kaes Van’t Hof said on its earnings call last week. The operators that Diamondback is speaking with all agree that “this oil price doesn’t work,” Van’t Hof said.
