Oil prices rebounded today, rising by more than 2% after suffering sharp losses that brought them to their lowest levels since May.
The upward move in oil comes as investors digested signs of trade relief following recent remarks by U.S. President Donald Trump, alongside stronger-than-expected Chinese trade data.
According to Reuters, the rebound was further supported by a series of potential geopolitical flashpoints, from rising tensions in Ukraine to renewed risks of escalation in the Middle East, that together injected a fresh risk premium into energy markets.
According to analysts cited by Reuters, oil prices had plunged to five-month lows last week amid a fragile ceasefire in Gaza and renewed trade uncertainty. Traders are refocusing on the potential for U.S.–China negotiations to ease the volatility that weighed on prices in previous sessions.
On the trade front, optimism began to return after Trump softened his tone toward China, writing on Truth Social, “Don’t worry about China, it will all be fine!” The statement, coming after threats of 100% tariffs on Chinese exports and expanded export controls, was read by markets as a signal that Washington may be leaving the door open for de-escalation. Goldman Sachs analysts said the most likely outcome remains an extension of the tariff truce originally reached in May, though they warned that trade tensions could still flare intermittently, leading to temporary volatility.
China’s economic data offered additional support to prices. The country’s exports surged 8.3% year-on-year in September, which is the fastest pace in six months, while imports rose 7.4%, reflecting resilient domestic demand despite ongoing tariff pressure. Economists cited by Reuters noted that the U.S. now accounts for only around 10% of China’s total exports, with trade flows increasingly redirected toward the European Union, ASEAN, Africa, and Latin America. This diversification has helped cushion China’s economy from U.S. tariff impacts, maintaining steady crude import growth, which rose 3.9% from last year to reach 11.5 million barrels per day.
The result is a more balanced global trade environment that supports energy demand stability leading to reduced price volatility caused by trade concerns.
At the same time, the geopolitical front continues to add layers of uncertainty. Iranian officials have renewed threats to close the Strait of Hormuz in response to Washington’s enforcement of sanctions targeting Tehran’s oil exports. This is even more likely in the case of renewed military actions.
An Iranian lawmaker warned that such a move would be taken if U.S. allies prevented Iranian crude shipments. Meanwhile, Israeli outlets have reported growing fears about renewing the war with Iran especially after the ceasefire in Gaze. Such a scenario could increase the risk of disrupt vital shipping lanes and trigger a sharp, though possibly temporary, spike in oil prices as traders react to supply risks.
Further intensifying geopolitical tension, President Trump has threatened to send long-range Tomahawk missiles to Ukraine if Russia continues to reject peace talks. Trump’s remarks underscore a potential shift toward a more assertive U.S. posture in Eastern Europe. These missiles could be used to attack vital energy infrastructure in Russia.
The Financial Times reported that the US has been providing Ukraine with critical intelligence support since mid-2025 to guide long-range drone strikes on Russian energy infrastructure, including oil refineries far behind the frontlines, as part of a coordinated effort to weaken Russia’s economy and push Vladimir Putin toward negotiations.
A decision to provide such advanced weaponry would mark a significant escalation, likely heightening tensions with Moscow and increasing the probability of energy supply disruptions. Analysts note that markets tend to price in a higher risk premium for crude whenever the Ukraine conflict shows signs of intensification, particularly given the region’s proximity to key European energy corridors.
These shocks, if they do indeed occur, are likely to be short-lived before the Organization of the Petroleum Exporting Countries (OPEC) intervenes to compensate for this potential supply shortage. This will come at a time when the Kingdom of Saudi Arabia is seeking to regain its market share of crude exports, which also serves its economic objectives, according to Wall Street Journal.
