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Oil prices rise ahead of Sino-US Trade Meeting

Oil prices rose slightly on Friday after increasing about 3% the previous session as trade tensions between the top oil consumers U.S.A. and China began to ease and Britain announced an "important" trade agreement with the United States.

Brent crude rose by 23 cents or 0.37% to $63.07 a barrel, while U.S. West Texas intermediate crude gained 21 cents or 0.35% at $60.12 a barrel as of 0507 GMT. Both contracts closed Thursday with gains of nearly 3%.

U.S. Treasury Sec. Scott Bessent and Vice Premier He Lifeng of China will meet in Switzerland on 10 May to resolve trade disputes which have threatened the growth in crude oil consumption.

If the two countries agree to start formal negotiations on trade and to lower their tariffs, while continuing talks, the markets would get a break and crude prices could rise another $2 to $3 per barrel, said Vandana, founder of oil analysis provider Vanda Insights.

Customs data released on Friday showed that China's exports grew faster than expected, and imports slowed their declines. This gives Beijing some relief before the icebreaker tariff talks this weekend with the U.S.

Separately U.S. president Donald Trump and British prime minister Keir starmer announced Britain agreed to lower tariffs for U.S. imported goods to 1.8%, from 5.1%. The U.S. reduced duties on British cars, but retained a 10% duty on most other goods.

Hari said that any further U.S. deals with major trading partners after the UK deal would only have a marginal effect on oil sentiment.

OPEC+, the Organization of the Petroleum Exporting Countries (or OPEC) and its allies plan to boost production in other countries. This could maintain pressure on the oil price. According to a survey, OPEC's oil production fell in April due to lower output in Venezuela, Libya and Iraq.

A tightening of U.S. sanctions against Iran could limit supply and drive prices up. Sources told Thursday that sanctions on two small Chinese oil refiners who bought Iranian crude made it hard for them to get crude, and caused them to try to sell the product under other names.

The Indian army reported that Pakistani forces had launched "multiple" attacks along India's western border during the night of Thursday and into Friday morning, as the conflict between nuclear-armed neighbors intensified.

Rystad Energy analysts expect both countries to increase crude purchases and refinery activities amid rising tensions.

Rohan Goindi, a Rystad analyst, said that "Diesel consumption is expected to decline as rerouted flights and cancellations result from airspace closures, which lead to increased ticket prices, rerouted flight, and cancellations."

Rystad Energy estimates that India's daily crude oil demand is 5.4 million barrels (bpd) compared with Pakistan's 0.25million bpd.

(source: Reuters)