Oil Prices Rally on Geopolitical Risks and Trade Deal Prospects

Crude oil benchmarks climbed to their highest levels in two months this week as fresh Middle East supply concerns collided with optimism about resolving the U.S.-China trade dispute. Brent crude surpassed $85 per barrel while WTI approached $82, marking the strongest performance since April as traders priced in multiple risk factors simultaneously.

The price surge follows renewed hostilities in the Middle East, including attacks on shipping routes and stalled nuclear negotiations with Iran. Simultaneously, progress in U.S.-China trade talks has raised expectations for improved global demand. “The market is getting squeezed from both sides,” noted energy analyst Mark Thompson. “Supply risks meet demand hopes at a time when inventories remain tight.”

While the rally reflects genuine market concerns, some analysts caution about overextension. CitiGroup’s energy team warns: “These are emotionally-driven moves that could reverse quickly if either geopolitical tensions ease or trade talks stall.” Traders will watch upcoming OPEC+ meetings and inventory reports for confirmation of whether current price levels reflect physical market fundamentals or speculative positioning. The coming weeks may prove decisive for determining whether oil maintains its upward trajectory or faces a correction.

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