Oil Prices Stabilize Amid Hopes for US-China Trade Progress but Face Long-Term Surplus Pressure

President Donald Trump said the US will “be fine” with China in comments that come just before the two sides return to the negotiating table and a fragile trade truce nears expiration.

When asked in an interview with Fox News on Sunday about his threat to raise the tariff on Chinese goods by 100%, Trump said the levy was “not sustainable” though “it could stand.”

He added that he had a good relationship with the Chinese leader, and he expected a sitdown to happen in South Korea, where an Asia-Pacific Economic Cooperation meeting starts later this month. “I think we’re going to be fine with China, but we have to have a fair deal. It’s got to be fair,” Trump said.

Treasury Secretary Scott Bessent has said the US and China will hold talks later this week in Malaysia. That came after he met virtually with Vice Premier He Lifeng on Friday, discussions that Chinese state media described as a constructive exchange of views.

A little over a week ago, Trump raised the prospect of canceling his first in-person meeting with China’s President Xi Jinping since he returned to the White House, angry over the Chinese government’s vow to exert broad controls on critical rare-earth elements. He also declared a 100% import surtax on Chinese goods to take effect Nov. 1.

That threatens a trade truce that’s set to run out on Nov. 10 unless extended. After months of tentative stability in the US-China relationship, tensions flared in recent weeks after Washington broadened some tech restrictions and proposed levies on Chinese ships entering US ports. China responded with parallel moves and outlined tighter export controls on rare earths and other critical materials.

China has tried to ease concern over the escalation of curbs on rare earths — critical to making fighter jets, smartphones and even car seats — to soften an international backlash.

In discussions on the sidelines of the International Monetary Fund’s annual meetings last week, Chinese delegates told their counterparts from around the world that tightened export controls will not harm normal trade flows, Bloomberg News reported earlier, citing people familiar with the matter.

The officials said China sought to build a long-term mechanism with the measure, and it was introduced as a response to US provocations such as the expansion of sanctions to capture subsidiaries of blacklisted companies, according to the people, who asked not to be named because the exchanges were private.

Source: Bloomberg Europe

New Zealand’s main opposition Labour Party has unveiled its first key policy ahead of the 2026 general election — a new government fund that will aim to drive investment and economic growth.

The New Zealand Future Fund will be established to focus on domestic investment, Labour finance spokesperson Barbara Edmonds said Monday in Wellington. It will sit alongside the existing NZ$85 billion ($49 billion) New Zealand Super Fund, which invests primarily overseas to support future pension payments.

Labour, which was ousted in the 2023 election, trails the governing National Party in political polling little more than 12 months out from the next election. With the economy smaller than in was in late 2023 and record numbers of citizens leaving the country, the party sees the government’s economic management as a weak spot.

“The Future Fund is how we back ourselves as a country so jobs, opportunity and wealth is made here and stays here,” Edmonds said. “The Fund will invest in New Zealand for the benefit of everyone, building infrastructure and backing innovative businesses to create secure, well-paid jobs and grow wealth in every region.”

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The Future Fund will be seeded with an unspecified capital contribution and a small number of state-owned assets that will provide a dividend stream and a base from which to leverage, Labour said in documents. The selected assets — also unidentified — will be protected by legislation and unable to be sold.

Guardians of New Zealand Superannuation, which manages the NZ Super Fund, will independently govern the new fund. The finance minister will set broad objectives through a letter of expectations.

Labour had 32% support in a recent One News-Verian poll, and alongside potential allies in the Green and Maori parties would control 46% of votes. National has 34% backing and with its current coalition partners would control 51%.

Source: Bloomberg Europe

European Central Bank President Christine Lagarde signaled openness to using frozen Russian assets to secure funding for Ukraine as long as countries around the world move in unison.

“I think fair use would consist of an operational loan that would be using cash balances as collaterals,” Lagarde said on CBS’s Face the Nation. “And I think that the strength of the system should be based on everyone holding Russian assets to do the same thing.”

The European Union has been looking more intensely at how to use about €200 billion in Russian funds that it froze after the attack on Ukraine, as other sources of financing for the country’s military and economic needs run dry. The issue is set to be discussed at a meeting of EU leaders this week.

The ECB has previously been wary of seizing the assets, given the potential repercussion for the euro’s international standing and financial stability. Lagarde — who spoke with Ukrainian President Volodymyr Zelenskiy two weeks ago — urged this month that any steps must be compatible with international law.

“If all those countries holding assets that have cash balances available as collaterals go in the same direction of lending the money to Ukraine, to be repaid by Russian financing of the reconstruction of Ukraine because Russia is the aggressor, then I think that would go a long way in convincing Russia that it has to come to the table to negotiate,” she told CBS.

Under plans being discussed by the EU, Ukraine would receive about €140 billion ($163 billion) in fresh loans using the assets. The money would only be paid back if Russia agrees to pay Ukraine for the damage caused by the war. The bloc also wants to coordinate using the assets with other Group of Seven allies, including the US, where some of the funds are held.

The matter is especially sensitive for the euro area as the ECB has identified an opportunity to increase the euro’s international role amid President Donald Trump’s attacks on global trade and US institutions including the Federal Reserve.

“I see signs that the attraction of the dollar is slightly eroded and future will tell whether there is more erosion of that,” Lagarde said on CBS, citing gold’s recent rally and capital flows out of the US to destinations including Europe.

“For a currency to be really trusted, you need a few things,” she said. “You need geopolitical credibility, you need the rule of law and strong institutions, and you need — I would call it — a military force that is strong enough. I think on at least one and possibly two accounts, the US is still in a very dominant position, but it needs to be very careful because those positions erode over the course of time.”

Turning to trade and the implications of higher US tariffs on the global economy, Lagarde said “we’re yet to feel the pain.” At the moment, companies in the US and Europe are absorbing around two thirds of the effects by squeezing their margins, she said.

But this can’t last forever “and when they don’t because it’s becoming too tight, then it’ll be on the consumer,” she said. “So, it’s a question of time.”

On China’s recent moves to restrict the export of rare earths and US threats of retaliation, Lagarde said she would “discount a little bit of the positioning at the moment, because this is typical of negotiating tactics on both sides.” But she stressed that China has a “very, very strong trading position on that front and they’re going to use it.”

Therefore, the US, Europe and other countries “should join forces and be a purchasing force on the other side of the table of a selling force,” she said.

Source: Bloomberg

U.S. President Donald Trump urged Ukrainian President Volodymyr Zelenskyy to accept Russia's terms for ending the war between Russia and Ukraine in a White House meeting on Friday, warning that President Vladimir Putin threatened to "destroy" Ukraine if it didn't comply, the Financial Times reported on Sunday.

During the meeting, Trump insisted Zelenskyy surrender the entire eastern Donbas region to Russia, repeatedly echoing talking points the Russian president had made in their call a day earlier, the newspaper said, citing people familiar with the matter.

Ukraine ultimately managed to swing Trump back to endorsing a freeze of the current front lines, the FT said. Trump said after the meeting that the two sides should stop the war at the battle line; Zelenskyy said that was an important point.

The White House did not immediately respond to a Reuters request for comment on the FT report.

Zelenskyy arrived at the White House on Friday looking for weapons to keep fighting his country's war, but met an American president who appeared more intent on brokering a peace deal.

In Thursday's call with Trump, Putin had offered some small areas of the two southern frontline regions of Kherson and Zaporizhzhia in exchange for the much larger parts of the Donbas now under Ukrainian control, the FT report added.

That is less than his original 2024 demand for Kyiv to cede the entirety of Donbas plus Kherson and Zaporizhzhia in the south, an area of nearly 20,000 square km.

Zelenskyy's spokesperson did not immediately respond to a request for comment sent outside business hours on whether Trump had pressured Zelenskyy to accept peace on Russia's terms.

Trump and Putin agreed on Thursday to hold a second summit on the war in Ukraine within the next two weeks, provisionally in Budapest, following an Aug. 15 meeting in Alaska that failed to produce a breakthrough.

Source: CNBC

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