Oil prices extended gains on Thursday amid optimism that a newly signed US-UK trade agreement could pave the way for similar deals with other countries, and as markets eye upcoming trade talks between the US and China. Brent crude, the international benchmark, rose by 0.42% to $63.28 per barrel, up from $63.01 at the previous session’s close. Meanwhile, US benchmark West Texas Intermediate (WTI) climbed 0.43%, trading at $60.20 per barrel compared to $59.94 the day before. Investor sentiment improved following the announcement of a new trade and economic agreement between the United States and the United Kingdom. UK Prime Minister Keir Starmer and US President Donald Trump jointly unveiled the deal on Thursday, with Starmer hailing it as “a fantastic, historic day.” Under the agreement, the US will lift tariffs on UK steel and aluminum and reduce duties on automobiles to 10%. Trump confirmed the removal of a 25% tariff on British steel and aluminum, and a cut in car tariffs from 27.5% to 10% for up to 100,000 vehicles annually. The UK exported 101,000 vehicles to the US last year. Markets also responded to hints of progress in US-China relations. Trump suggested that he may lower tariffs on Chinese goods if trade talks scheduled for this weekend in Switzerland go well. US Treasury Secretary Scott Bessent is expected to lead the discussions with Chinese officials. The developments are seen as potentially easing global trade tensions, thereby boosting oil demand prospects and supporting prices. Geopolitical risks also contributed to the bullish momentum. Rising tensions between India and Pakistan sparked concerns over potential disruptions to energy supply chains. While analysts downplay the likelihood of direct attacks on merchant vessels, they warn that increased naval activity could pose risks to supply security, especially in sensitive maritime zones. India is reportedly considering increased crude oil purchases for strategic reserves, a move that could exert further short-term upward pressure on prices. Tensions escalated this week after India launched “Operation Sindoor” late Tuesday, claiming it targeted terrorist infrastructure at nine sites inside Pakistan. The Pakistani military reported 31 fatalities from Indian missile strikes and cross-border shelling in Pakistan-administered Kashmir. Indian officials said at least 16 people were killed along the Line of Control in Indian-administered Kashmir.