Investing.com -- Oil prices soared Monday, adding to last week’s sharp gains, after the U.S. and China announced a trade deal which would ease some of their tariff measures, raising hopes of an end to the trade war between the world’s two largest consumers of crude oil.

At 08:20 ET (12:20 GMT), Brent Oil Futures expiring in June rose 3.7% to $66.28 per barrel, while West Texas Intermediate (WTI) crude futures gained 4% to $63.43 per barrel.

Both contracts rose by more than 4% last week on optimism over a potential de-escalation in Trump’s tariff agenda.

U.S.-China deal eases tensions

Monday’s surge was driven by the news that the U.S. and China have agreed to a 90-day pause to soaring tariffs placed on each other and will temporarily lower their respective levies.

Washington has agreed to cut U.S. President Donald Trump’s so-called "reciprocal" tariffs on China to 10%, while a 20% tariff related to Beijing’s alleged role in the flow of the illegal drug fentanyl remains in force. Meanwhile, China’s duties on U.S. imports are being cut to 10%, the nations said in a rare joint statement following high-stakes trade talks over the weekend.

More negotiations are planned between the two sides, while both sides may conduct working-level consultations on relevant economic and trade issues, the countries said.

Crude prices have been hit hard over the last month or so on worries that the trade spat may spiral into a crisis that could threaten global economic activity and increase uncertainty for businesses.

As the world’s two largest economies move toward a more stable trade relationship, expectations of stronger industrial activity and consumer demand, especially in China, lifted sentiment around the demand outlook.

OPEC+ hike decision weighs heavily

Despite the positive outlook, oil price gains were tempered by plans from OPEC+ to increase oil output in May and June.

“These changes to its production schedule ultimately shorten the timeline for the full return of the 2.2 mm b/d tranche of its production cuts to 14 months from the 18 months initially announced in December 2024,” said analysts at BCA Research, in a note dated May 12.

The hike decision comes at a time when there is already plenty of demand uncertainty.

The timing of these production hikes suggests that geopolitical considerations are also at play, BCA added. Specifically, U.S.-Saudi relations.

President Trump has been explicit about his preference for low oil prices, and Saudi Arabia is hoping to secure greater military, defence, and civil nuclear cooperation.

By unwinding some support for oil prices ahead of Trump’s visit this week, Saudi Arabia may be hoping to demonstrate that it is willing to negotiate in good faith.

Elsewhere, U.S.-Iran nuclear talks concluded on Sunday, with further negotiations planned, leaving the potential for increased Iranian oil exports uncertain.

The fourth round of talks occurred in advance of Trump’s trip to the Middle East.

Investors also closely watched increased geopolitical tensions between India and Pakistan, as the nuclear-armed neighbors engaged in their worst fighting in decades.

The two countries reached a ceasefire agreement on Saturday, though reports of violations emerged shortly afterward.

Ayushman Ojha contributed to this article.