Oil prices regained some of its losses and was closer to breach $60 a barrel on Tuesday, as markets remained optimistic about a breakthrough in trade talks between the US and China.
On Monday, US President Donald Trump granted a 90-day reprieve, under which American companies will be allowed to sell select parts to Chinese telecoms manufacturer Huawei.
Brent was trading at $59.83 per barrel at 1.34pm UAE time as traders were hopeful the extension signalled progress in the ongoing trade dispute between the world's two largest economies, which would ease concerns about demand for crude.
Oil started the week on a high note amid market fears of supply disruption after a gas facility on a Saudi Arabian oilfield came under attack on Saturday from armed drones.
Global stocks reacted positively to the US extension to Huawei, which has faced restrictions over espionage concerns.
An ease in rhetoric from the US would be welcomed, given that the announcement of an additional 10 per cent tariff on $300 billion (Dh1.1 trillion) worth of Chinese imports at the beginning of August sent global stocks and commodity prices into a tailspin.
The tariff, which would be on top of a 25 per cent tax on $250bn worth of Chinese goods, was postponed until December 15 from September 1, to avoid hurting US consumers during the Christmas season.
However, alongside the extension, the US added 46 companies affiliated with Huawei to a blacklist.
Huawei denounced the blacklist as "politically motivated" and having "nothing to do with national security".
The company said US actions violated basic principles of free market competition.
“They are in no one’s interests, including US companies. Attempts to suppress Huawei’s business won’t help the United States achieve technological leadership,” the Chinese company said.
Over the next 10 days, US and Chinese trade representatives are expected to discuss measures to resolve their trade issues.
President Trump has signalled a willingness to engage. Earlier this week, he wrote on Twitter: “We are doing very well with China, and talking!"