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Trade agreements

Oil Prices Rise on US-EU Trade Deal and Tariff Relief

Strategic Insights

— 1 min read

The recent uptick in crude oil prices has been attributed to the new trade agreement between the United States and the European Union, which has eased fears of economic slowdown and reduced fuel demand. The deal, finalized on Sunday, sets a 15% import tariff on most EU goods, significantly lower than the previously proposed rate. This development, coupled with the possibility of extended tariff relief with China, has bolstered global markets and supported oil prices. As a result, Brent crude futures rose by 22 cents, or 0.32%, to $68.66 per barrel, while U.S. West Texas Intermediate crude increased by 22 cents, or 0.34%, to $65.38 per barrel.

Key Takeaways:

  • The US-EU trade deal has eased fears of economic slowdown and reduced fuel demand, contributing to the rise in oil prices.
  • The deal sets a 15% import tariff on most EU goods, significantly lower than the previously proposed rate.
  • The possibility of extended tariff relief with China is also supporting oil prices, with high-level US and Chinese negotiators set to meet in Stockholm on Monday.
  • OPEC+ aims to regain market share while summer demand absorbs additional supply, and a key monitoring panel is set to convene on Monday to discuss easing supply restrictions.
  • Global oil demand grew by 600,000 barrels per day year-on-year in July, according to JP Morgan analysts.
  • Global oil inventories rose by 1.6 million barrels per day, according to the same analysts.
  • Yemen's Houthis announced 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.

Statistics:

  • Brent crude futures rose by 22 cents, or 0.32%, to $68.66 per barrel.
  • US West Texas Intermediate crude increased by 22 cents, or 0.34%, to $65.38 per barrel.
  • The US-EU trade deal sets a 15% import tariff on most EU goods.
  • Global oil demand grew by 600,000 barrels per day year-on-year in July.
  • Global oil inventories rose by 1.6 million barrels per day.
  • OPEC+ plans to increase output by 548,000 barrels per day in August.
  • The deadline for extending tariff truce between the US and China is on August 12.

Sources:

  • IG Markets analyst Tony Sycamore
  • US-EU trade framework
  • Venezuela's state-owned PDVSA
  • OPEC+ monitoring panel
  • JP Morgan analysts
  • Reuters
  • Bloomberg
  • CNBC

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