Oil rises as Trump doubts Iran talks, sees China deal ‘done’

Oil prices rallied as US President Donald Trump signaled skepticism over talks with Iran and confidence in a trade deal with China.  

West Texas Intermediate rose as much as 2.3% to the highest level since early April. Trump told the New York Post he’s “less confident” about whether he can convince Tehran to agree on shutting down its nuclear programme.

Earlier, Iranian Foreign Minister Abbas Araghchi said a nuclear deal was “within reach” and could be “achieved rapidly.” 

Trump also posted on social media that a deal with China was “done,” subject to the approval of President Xi Jinping.

The agreement would still see some tariffs between the two nations, he said, without elaborating.

Global markets were whipsawed after the comments. 

Expectations a trade war between the world’s two largest economies could hurt demand and that a deal with Iran would bring back sanctioned barrels, on top of rising OPEC+ supplies, have been among the main bearish factors putting pressure on crude prices.

US inflation data also came in below estimates, denting the dollar and making raw materials priced in the US currency more appealing.

“Oil prices jumped on comments from US President Trump that downplayed the potential for a near-term nuclear deal with Iran,” said Jens Naervig Pedersen, a strategist at Danske Bank.

“The comments add to the recent sentiment boost in the oil market from progress in trade talks and potential for tighter sanctions on Russia.”

Crude has dropped this year as trade jitters hurt the appetite for risk assets, including commodities. At the same time, OPEC+ moved to restore idled capacity at a faster than expected pace, boosting concerns about a glut later this year. Prices recovered in recent sessions, supported by easing trade tensions and the outlook for summer demand. 

A monthly report from the US Energy Information Administration underscored the oil market’s current uncertainties. While the agency expects supply to eclipse demand by 800,000 barrels a day this year, the most since it began publishing a forecast for 2025, it also doesn’t see US crude production topping last month’s levels before the end of next year, a sign that lower prices are curbing some supply. 

An industry estimate, meanwhile, showed that US crude inventories fell by about 400,000 barrels last week. The drawdown would be the third decline in a row, if confirmed by official data later Wednesday.   

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