(Reuters) Oil prices jumped by about 4% after the U.S. and China said they would ease some of their tariff measures, raising hopes of an end to the trade war between the world's two largest consumers of crude oil.
Brent crude futures were up $2.08, or 3.25%, at $65.99 a barrel after giving up some early gains. U.S. West Texas Intermediate (WTI) crude futures were trading up $2.05, or 3.36%, at $63.07.
The U.S. and China on Monday announced agreement on a temporary pause on tariffs after talks in Geneva over the weekend. The two sides agreed to a 90-day pause and said tariffs would be cut by more than 100 percentage points to a 10% baseline rate.
A de-escalation between the U.S. and China would limit the potential economic fallout of a prolonged trade war, offering an improved demand outlook to oil prices, said Saxo Bank analyst Ole Hansen.
The Geneva meetings were the first face-to-face interactions between senior U.S. and Chinese economic officials since U.S. President Donald Trump returned to power and launched a spate of tariffs on trading partners across the globe.
Positive talks between the world's two largest economies could help to boost demand as trade between the countries is restored.
"This is a start at least and is better news coming out of talks at the weekend than a failure to agree anything, so it is no surprise that oil markets are higher," said Investec head of commodities Callum Macpherson.
Both oil benchmarks rose more than 4% last week after a U.S. trade deal with Britain swelled investor optimism that economic disruptions from U.S. tariffs on trading partners may be avoided.
The trade war between the U.S. and China had pushed oil prices to their lowest in four years in early April.
Separately, talks between Iranian and U.S. negotiators to resolve disputes over Tehran's nuclear program ended in Oman on Sunday with further negotiations planned, officials said, as Tehran publicly insisted on continuing its uranium enrichment.
A U.S.-Iran nuclear deal could alleviate concerns about lower global oil supply, which could also pressure oil prices.
