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Trade agreements

Oil Prices Rise on US-EU Trade Deal and Possible Extension of China Tariff Pause

Strategic Insights

— 2 min read

Global oil prices edged higher on Monday as a US-European Union trade deal and the possibility of extending a tariff pause with China alleviated concerns about trade tensions and fuel demand. Brent crude futures inched up 22 cents, or 0.32 per cent, to 68.66 dollars a barrel, while US West Texas Intermediate crude rose 22 cents, or 0.34 per cent, to 65.38 dollars a barrel. IG Markets analyst Tony Sycamore attributed the rise to the supportive global financial markets and oil prices. The US-EU trade deal, which imposes a 15 per cent import tariff on most EU goods, averted a bigger trade war between the two allies who account for almost one-third of global trade. The deal also averted a potential impact on fuel demand.

Key Takeaways:

  • Oil prices rose on Monday after a US-EU trade deal and a possible extension of the China tariff pause, citing IG Markets analyst Tony Sycamore.
  • The US-EU trade deal imposes a 15 per cent import tariff on most EU goods, averted a bigger trade war between two allies who account for almost one-third of global trade.
  • Venezuela's state-run oil company PDVSA is set to resume work at its joint ventures under terms similar to Biden-era licenses, following the reinstatement of authorisations for its partners to operate and export oil under swaps.
  • OPEC+ is unlikely to recommend altering existing plans to raise oil output by 548,000 barrels per day in August, despite the prospect of OPEC+ further easing supply curbs.
  • Global oil demand rose by 600,000 bpd in July on year, while global oil stocks rose by 1.6 million bpd, according to JP Morgan analysts.
  • The Houthis announced on Sunday they would target any ships belonging to companies that do business with Israeli ports, as part of their military operations against Israel over the Gaza conflict.

Statistics:

  • Brent crude futures inched up 22 cents, or 0.32 per cent, to 68.66 dollars a barrel by 0035 GMT.
  • U.S. West Texas Intermediate crude was at 65.38 dollars a barrel, up 22 cents, or 0.34 per cent.
  • The US-EU trade deal imposes a 15 per cent import tariff on most EU goods.
  • OPEC+ plans to raise oil output by 548,000 barrels per day in August.
  • Global oil demand rose by 600,000 bpd in July on year.
  • Global oil stocks rose by 1.6 million bpd.

Sources:

  • Reuters: "Oil prices rise on US-EU trade deal, possible China tariff pause extension"
  • Bloomberg: "Oil Prices Climb as US-EU Trade Deal and China Tariff Pause Loom"
  • IG Markets: Statement by Tony Sycamore, IG Markets analyst
  • US-European Union trade deal: Terms of the agreement
  • JP Morgan: Report on global oil demand and stocks
  • Houthi statement: Announcement of targeting ships belonging to companies that do business with Israeli ports

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