Oil Prices Rise on US-EU Trade Deal and Hopes of China Tariff Truce
Oil prices moved higher on Monday, supported by a new trade agreement between the United States and the European Union, along with signs that Washington may extend its tariff pause with China. The developments eased concerns that rising tariffs would hurt global growth and reduce fuel demand.
Brent crude futures climbed 61 cents, or 0.89%, to $69.05 per barrel by 06:47 GMT. U.S. West Texas Intermediate (WTI) crude rose 59 cents, or 0.91%, to $65.75 per barrel.
According to IG Markets analyst Tony Sycamore, the U.S.–EU trade deal and hopes of a U.S.–China tariff extension have boosted sentiment in oil markets. “With the risk of a prolonged trade war easing, markets have responded positively,” he noted.
Trade Deal Reduces Market Tensions
The trade framework announced on Sunday includes a 15% U.S. tariff on most EU imports, down from a proposed 30%. The deal helped prevent a broader trade conflict between two major global economies, which together account for nearly one-third of international trade.
At the same time, senior U.S. and Chinese officials are meeting in Stockholm on Monday to negotiate a possible 90-day extension to the current tariff truce, ahead of the August 12 deadline.
Other Factors Influencing Oil Markets
Oil prices had dropped to a three-week low on Friday due to worries about global trade and rising supply expectations, particularly from Venezuela.
PDVSA, Venezuela’s state oil company, is preparing to restart operations in its joint ventures. The move depends on U.S. President Donald Trump reinstating authorizations that would allow exports under oil swap deals, similar to those under the Biden administration.
While prices rose slightly on Monday, gains were limited by expectations that OPEC+ may continue easing production cuts.
The OPEC+ Joint Ministerial Monitoring Committee (JMMC) is scheduled to meet at 12:00 GMT. Most OPEC+ delegates expect no changes to plans that call for a 548,000 barrels-per-day increase in August. One source, however, said the decision remains uncertain.
Analysts at ING predict that OPEC+ will restore the remaining 2.2 million barrels per day of voluntary cuts by the end of September, which could mean a September supply hike of at least 280,000 barrels per day. There is also potential for a more aggressive increase as summer demand strengthens.
Rising Demand and Geopolitical Risks
J.P. Morgan analysts estimate that global oil demand rose by 600,000 barrels per day in July compared to last year. Global oil inventories also increased by 1.6 million barrels per day.
In the Middle East, Yemen’s Houthi rebels warned on Sunday that they would target vessels linked to companies doing business with Israeli ports. The threat marks the fourth phase of their military campaign against Israel over the Gaza conflict and adds a layer of geopolitical risk for global shipping routes.
