Oil prices extended gains on trade optimism and easing inflation

Crude oil prices extended their rally on Tuesday, 13 May 2025, buoyed by renewed optimism over US-China trade relations and a surprisingly soft US inflation report, both of which improved the global economic outlook.

International benchmarks posted notable gains, with Brent crude futures settling at $66.63 per barrel, up $1.67, or 2.57%, while WTI crude closed at $63.67, rising $1.72, or 2.78%.

The latest advance builds on Monday’s sharp uptick, when both benchmarks surged by over 4% after Washington and Beijing agreed to substantially reduce import tariffs for a minimum of 90 days—a move seen as a de-escalation in the long-running trade dispute and a potential boost to global demand.

Further supporting sentiment, the US Consumer Price Index (CPI) data released on Tuesday showed a 2.3% annual increase through April—the slowest year-on-year rise in four years. The softer inflation print has bolstered market expectations that the Federal Reserve may have room to initiate interest rate cuts.

Adding to bullish pressures, geopolitical tensions resurfaced after the US President pledged to maintain “maximum pressure” on Iranian oil exports should diplomatic efforts fail to yield a resolution. The renewed threat of supply disruption from Iran—already under heavy sanctions—further underpinned prices.