Stephanie Kelly

NEW YORK (Reuters) - Oil prices rose about 3% on Thursday, amid hopes of breaking through imminent trade talks between the world’s two largest oil consumers, the United States and China.

Brent crude futures fell $1.72, or 2.8%, at $62.84 a barrel. The U.S. West Texas Intermediate crude oil rose $1.84, or 3.2%, to $59.91.

U.S. Treasury Secretary Scott Bessent will meet with top Chinese economic officials in Switzerland on May 10 to negotiate a trade war that undermines the global economy. Optimism about these negotiations is supporting the market, said SEB analyst Ole Hvalbye.

These countries are the two largest economies in the world, and the impact of their trade disputes is likely to reduce growth in crude oil consumption.

Analysts warn that recent tariff-driven volatility in the oil market has not yet ended.

"Over the past few years, the rise and fall in global risk premiums have been replaced by tariff premiums, which will also fluctuate in response to the latest headlines of the Trump administration," said Ritterbusch and Associates, a U.S. energy consulting firm Ritterbusch and Associates.

In another trade development, U.S. President Donald Trump and British Prime Minister Keir Starmer announced a "breakthrough agreement" for trade that imposes 10% tariffs on goods imported from the UK, while the UK agreed to reduce its tariffs from 5.1% to 1.8% and provide greater use of goods.

On the supply side, oil exporters and their allies in OPEC+ will increase their oil production, thus exerting pressure.

OPEC oil production fell in April despite scheduled outputs taking effect, resulting from a cut in Venezuela's supply in amid a new U.S. attempt to curb smaller landings in Iraq and Libya, a Reuters survey found.

Analysts at Citi Research lowered Brent’s three-month price forecast from $60 to $55 a barrel, but this year’s long-term forecast is $60 a barrel.

They added that the U.S.-Iran nuclear deal with increased global supply could reduce Brent’s price to $50 a barrel, but no transaction could rise above $70.

Sources familiar with the matter said the U.S. sanctions on two small Chinese refineries have caused difficulties in purchasing Iranian oil and led them to sell products under other names, proving disruptive evidence of Washington's increased pressure that this was caused to Tehran's largest oil buyer.

(Reported by Stephanie Kelly of New York, Seher Dareen of London, Katya Golubkova of Tokyo and Emily Chow of Singapore; Editors of David Evans and Ed Osmond, Kirsten Donovan and David Gregorio)