Settlemet Talks Begin To End US And China Trade War

On August 16, oil prices slightly recovered after China agreed to negotiate some terms to resolve the ongoing war between the United States and China. However, the oil market is still bearish owing to the U.S. sanctions and the global economic slowdown. Brent crude oil futures LCOc1 were at $71.11 per barrel from their last close and the US West Texas Intermediate (WTI) crude futures CLc1 were up at $65.17 per barrel. Both benchmarks lost more than 2 percent during the trading hours.

Experts stated that the slight recovery in prices was due to the news that the Chinese Vice Minister of Commerce Wang Shouwen will lead the Chinese delegations with the US authorities. The US representatives will be led by David Malpass, the Under Secretary of Treasury for International Affairs. This news has ignited a hope that both countries want this trade war to end without destroying each other economies.

Tit-For-Tat Will End

There are several things the U.S. President Donald Trump initiated since his election. However, the global trade war is an excellent example of what he is capable of. When the United States imposed heavy tariffs on China and several other countries, to return the favor, China also implemented tit-for-tat tariffs and threatened with heavy duties on billions of dollar worth goods. This had a damaging effect on the oil industry and led to an increase in oil prices beyond anyone’s expectations. When China and the U.S. were busy playing “tariffs game”, several other Asian countries and their markets were witnessing a slowdown in the market and currency weakness, which in turn dragged down the oil industry. In addition, Japan and Tehran showed a slowdown in oil demand as well as a decline in crude oil import. As reported by Reuters, several Asian buyers such as South Korea, Japan, and India scaled back orders from Iran’s oil exports due to the threat of U.S. sanctions. Thus, the news of negotiations to end the this war once and for all has given hope to the market players to invest again, which recovered the crude oil market.

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