Having dipped to multiyear high, international crude oil price is seemingly on its way to regain the lost ground, as US-led geopolitical initiatives continue to drive the market. Brent crude has gained 7 percent in last four trading sessions, and experts opine the bulls may just be warming up, as news on the economic front from Asia and unexpectedly low production by Opec members despite production cut rollbacks – are shaping up the narrative.
After months of range-bound trading and weak sentiment, oil prices appear to have found a floor — and perhaps even a new trajectory. The shift has not been driven by a single factor but by a rare convergence of geopolitical signals, policy pivots, and improving macro indicators that have collectively turned the market’s attention back to demand fundamentals.
At the centre of this pivot is the recent shift in global trade dynamics. Donald Trump’s massive U-turn on global trade tariffs has taken everybody by surprise. The US-China tariffs which were fast brewing intro a catastrophe for global growth dynamics and had fueled recession fears in the US, have now been paused for 90-days at significantly reduced levels.
Recall that until this agreement, the tariffs had reached as high as 145 percent for Chinese goods entering the US and 125 percent for the US goods into China. Although details remain tentative, the step suggests a broader willingness to de-escalate what was once the defining trade conflict of the global economy. This 90-day tariff pause between the U.S. and China — even if temporary — is already having ripple effects across global markets.
For oil, the implications are direct. Demand for energy, particularly in freight and industrial sectors, is tightly linked to the health of global trade. As tariff tensions ease, expectations for a rebound in shipping, logistics, and manufacturing activity have risen. This has led forecasting agencies, including the IEA and OPEC, to revise their oil demand projections upward — now expecting growth of 3-3.5 percent for the rest of 2025 – up from most projections that had suggested muted growth in the aftermath of Liberation Day tariffs.
Other indicators, such as container throughput, airline bookings, and industrial production in key Asian economies, also suggest a modest but clear pickup in momentum. While longer-term risks remain — including the ongoing energy transition and rising EV penetration — the short-run sentiment has decisively turned more bullish.
As the second half of the year unfolds, oil markets will be closely watching the follow-through on OPEC+ supply increases, further policy signals from Washington and Beijing, and the durability of global demand. For now, oil seems to have escaped the gravitational pull of last year’s pessimism — and is beginning to respond to a world that, for the first time in years, looks more open to trade than it did yesterday.
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