By Seher Dareen and Sam Li
(Reuters) -Oil prices fell over 1% on Monday after U.S. and Chinese economic officials sketched out a trade deal framework, easing fears that tariffs and export curbs between the world’s top two oil consumers could dent global economic growth.
U.S. Treasury Secretary Scott Bessent on Sunday said U.S. and Chinese officials hashed out a “substantial framework” for a trade deal which would avoid 100% U.S. tariffs on Chinese goods and achieve a deferral of China’s rare-earth export controls in impending trade discussions this week.
Brent crude futures fell 75 cents, or 1.1%, to $65.19 a barrel by 0758 GMT. U.S. West Texas Intermediate crude futures were down 71 cents, or around 1.2%, to $60.79.
The trade deal framework helps allay concern that Russia could offset new U.S. sanctions, targeting Rosneft and Lukoil, by offering deeper discounts and using shadow fleets to lure buyers, said IG market analyst Tony Sycamore.
“However, if sanctions on Russian energy are less effective than expected, oversupply pressures could return to the market,” said Haitong Securities analyst Yang An.
Meanwhile Iraq, the OPEC group’s biggest overproducer, was in negotiations over the size of its quota within its available capacity of 5.5 million barrels per day, oil minister Hayan Abdel-Ghani said at an oil conference on Monday.
The group, which pumps about half of the world’s oil, has reversed course this year to regain market share and helped in part to keep a lid on oil prices.
Last week, Brent and WTI rose 8.9% and 7.7%, respectively, on U.S. and EU sanctions on Russia.
“We are unsure the risk from Russian sanctions is ‘priced in.’ The moves from the latter part of last week are definitely in reaction to the surprise change in narrative from the U.S. Administration (on Russia), and how the market was most likely overextended to the downside,” said PVM Oil Associates analyst John Evans.
(Reporting by Seher Dareen in London, Sam Li and Colleen Howe; Editing by Christopher Cushing and Bernadette Baum)