Oil Hits 7-Week High on Deal – Capital Street FX

Oil climbs to a seven-week high amid optimism over a US-China trade agreement.

Oil prices surged to a seven-week high on Wednesday after U.S. President Donald Trump announced a trade agreement with China, boosting hopes of reduced tensions between the world’s two largest economies.

Brent crude rose $1.15, or 1.7%, to $68.02 a barrel by 1249 GMT, while U.S. West Texas Intermediate (WTI) gained $1.31, or 2%, to $66.29—its highest level in over two months.

Meanwhile, Trump expressed skepticism over Iran’s willingness to halt uranium enrichment, while Iran warned of potential strikes on U.S. bases if nuclear talks break down. Persistent U.S.-Iran tensions suggest Iranian oil exports may remain constrained by sanctions.

On the supply front, OPEC+ is set to increase output by 411,000 barrels per day in July, marking the fourth consecutive month of production hikes. However, rising domestic demand, especially in Saudi Arabia, could help absorb this additional supply and support prices, according to Capital Economics analyst Hamad Hussain.

In the U.S., softer-than-expected May inflation data bolstered expectations that the Federal Reserve could begin cutting interest rates by September—potentially spurring economic growth and energy demand.

Trump also stated that China will supply rare earth minerals and magnets, while the U.S. will ease restrictions on Chinese students—a deal still pending approval from both Trump and Chinese President Xi Jinping.