Oil prices gained on Monday as the United States and China reached a framework for a new trade agreement, signaling a potential thaw in the world’s largest economic relationship. The progress boosted global risk appetite and revived expectations of stronger demand growth, particularly across Asia’s energy markets, after months of stagnation in trade flows and industrial activity.

Trade Breakthrough Fuels Risk Appetite

The announcement of a trade-deal framework between Washington and Beijing marked the first meaningful step toward resolving tariff-related frictions that have weighed on global growth. According to market reports, the framework includes commitments on technology transfers, agricultural purchases, and the gradual reduction of certain tariffs. Investors interpreted the development as a sign of policy coordination that could ease inflationary pressures and restore trade momentum.

As a result, Brent crude climbed 1.6% to $87.10 per barrel, while West Texas Intermediate (WTI) gained 1.8% to $82.95. The rally was accompanied by an uptick in equity markets across Asia and Europe, with energy producers leading gains. Market participants noted that the move underscores the sensitivity of oil prices to global trade developments, especially those involving China, the world’s largest importer of crude.

Supply Dynamics and OPEC’s Response

While the trade news lifted sentiment, underlying supply conditions also remain tight. OPEC+ members have signaled continued discipline in production, with Saudi Arabia and Russia maintaining voluntary cuts through the end of the year. The group’s adherence to supply management has helped stabilize prices amid uneven demand recovery.

At the same time, U.S. production remains near record levels at around 13.2 million barrels per day, according to the Energy Information Administration (EIA). The interplay between OPEC’s restraint and resilient U.S. output has kept markets balanced, but analysts caution that any sudden demand surge could quickly pressure inventories, which remain below five-year averages.

Implications for Global and Israeli Energy Markets

For Israel and other import-dependent economies, the rebound in crude prices could translate into higher energy costs and inflationary spillovers. However, stronger global growth prospects tied to improved trade relations may offset some of the inflation impact through enhanced export activity and investment flows. Israeli refiners and energy firms could benefit from greater regional trade stability, particularly if Asian demand strengthens.

Economists also point out that a firmer oil market often supports investor sentiment across commodities and related assets. In recent months, local investors have diversified portfolios toward energy-linked equities and ETFs, viewing them as a hedge against global inflation volatility.

Looking ahead, traders will monitor further U.S.-China negotiations, OPEC+ policy signals, and inventory data to gauge the sustainability of the rally. If the trade framework evolves into a formal agreement, analysts expect oil to test the $90 per barrel mark. Conversely, renewed geopolitical or policy uncertainty could limit gains and reintroduce volatility to energy markets in the final quarter of the year.