Oil Prices Rise on US-EU Trade Deal and Potential US-China Tariff Pause

Strategic Insights -

Oil prices increased on Monday, driven by the U.S. reaching a trade deal with the European Union and the possibility of extending a tariff pause with China. The U.S.-EU trade deal, which avoids a bigger trade war between the two allies, has alleviated concerns about limited economic activity and fuel demand. Meanwhile, senior U.S. and Chinese negotiators are set to meet in Stockholm on Monday to discuss extending the tariff truce. The resumption of oil supply from Venezuela is also expected to contribute to the increase in oil prices.

Key Takeaways:

  • Oil prices rose by 0.32% to $68.66 a barrel for Brent crude futures and by 0.34% to $65.38 a barrel for U.S. West Texas Intermediate crude.
  • The U.S.-EU trade deal will impose a 15% import tariff on most EU goods, half the threatened rate.
  • The deal averted a bigger trade war between the two allies that account for almost one-third of global trade.
  • Senior U.S. and Chinese negotiators will meet in Stockholm to discuss extending the tariff truce, potentially limiting higher tariffs.
  • Venezuela's state-run oil company, PDVSA, is preparing to resume work at its joint ventures under terms similar to Biden-era licenses.
  • OPEC+ is unlikely to alter its plans to raise oil output by 548,000 barrels per day in August, despite the potential for increased supply.
  • Global oil demand rose by 600,000 bpd in July on year, while global oil stocks rose 1.6 million bpd.

Statistics:

  • Oil prices rose by 22 cents, or 0.32%, to $68.66 a barrel for Brent crude futures.
  • U.S. West Texas Intermediate crude was at $65.38 a barrel, up 22 cents, or 0.34%.
  • The U.S.-EU trade deal will impose a 15% import tariff on most EU goods.
  • The trade deal averted a bigger trade war between the two allies that account for almost one-third of global trade.
  • 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 1.6 million bpd.

Sources:

  • "APA reports citing Investing."
  • "IG markets analyst Tony Sycamore."