Crude oil prices saw an uptick on Monday following a new trade agreement between the United States and the European Union (EU), coupled with the possibility of extended tariff relief with China, easing fears of economic slowdown and reduced fuel demand.
By 0035 GMT, Brent crude futures rose by 22 cents, or 0.32%, reaching $68.66 per barrel, while U.S. West Texas Intermediate crude increased by 22 cents, or 0.34%, to $65.38 per barrel.
“The U.S.-EU trade deal and potential continuation of the U.S.-China tariff pause are bolstering global markets and supporting oil prices,” said Tony Sycamore, an analyst at IG Markets.
On Sunday, the U.S. and EU finalized a trade framework that sets a 15% import tariff on most EU goods, significantly lower than the previously proposed rate, averting a potential trade conflict between two major economies responsible for nearly a third of global trade. This development helps mitigate concerns over reduced fuel demand.
Additionally, high-level U.S. and Chinese negotiators are scheduled to meet in Stockholm on Monday to discuss extending a tariff truce, with a deadline looming on August 12.
Despite Friday’s dip to a three-week low due to global trade uncertainties and anticipated increases in Venezuelan oil supply, prices edged higher on Monday. Sources from Venezuela’s state-owned PDVSA indicated the company is preparing to restart operations at its joint ventures under terms akin to previous Biden-era licenses, pending U.S. President Donald Trump’s reinstatement of export authorizations for its partners.
However, gains were tempered by expectations that OPEC+ will proceed with plans to ease supply restrictions. A key OPEC+ monitoring panel is set to convene at 1200 GMT on Monday, with four delegates suggesting last week that the group is unlikely to alter its plan to increase output by 548,000 barrels per day in August. One source cautioned that a final decision is premature.
OPEC+ aims to regain market share while summer demand absorbs additional supply. According to JP Morgan analysts, global oil demand grew by 600,000 barrels per day year-on-year in July, while global oil inventories rose by 1.6 million barrels per day.
In the Middle East, Yemen’s Houthis announced on Sunday intentions to target ships linked to companies doing business with Israeli ports, regardless of nationality, as part of their ongoing military actions related to the Gaza conflict.
