Oil prices climbed on Monday after the United States sealed a trade agreement with the European Union and signaled that a tariff pause with China could be extended. These developments eased fears that escalating tariffs might weaken economic growth and curb fuel demand.
As of 5:27 GMT, Brent crude futures rose 48 cents, or 0.70 percent, to $68.92 a barrel, while U.S. West Texas Intermediate crude rose 41 cents, or 0.63 percent, to $65.57 a barrel.
U.S.-EU trade deal boosts demand outlook
The U.S.-European Union trade deal, along with the potential extension of the U.S.-China tariff pause, is helping to lift global financial markets and oil prices. Analysts noted that with the risk of a prolonged trade war diminishing and the significance of the August 1 tariff deadlines being gradually reduced, markets have responded positively.
The U.S.-EU deal, announced on Sunday, establishes a 15 percent import tariff on most European goods, half the initially threatened rate. The deal helped avert a broader trade war between the two economic powers, which together account for nearly a third of global trade, and eased concerns over its potential impact on fuel demand.
Meanwhile, senior U.S. and Chinese negotiators are scheduled to meet in Stockholm on Monday to discuss extending a truce that has so far prevented steep tariff hikes, with the current pause set to expire on August 12.
Read: Dubai 24-carat gold prices rise to AED402.5 as dollar weakens following U.S.-EU tariff deal
Venezuela supply boost caps oil gains
Oil prices closed at their lowest level in three weeks on Friday, pressured by ongoing global trade uncertainties and the prospect of increased supply from Venezuela.
Sources from Venezuela’s state-run oil company PDVSA said the firm is preparing to restart operations at its joint ventures under terms similar to those granted during the Biden administration. This would be contingent on U.S. President Donald Trump reinstating authorizations that allow PDVSA’s partners to operate and export oil through swap agreements.
Oil prices saw modest gains on Monday, though further increases were capped by expectations that OPEC+ may continue easing supply restrictions. A market monitoring panel from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) is scheduled to meet at 12:00 GMT on Monday.
According to four OPEC+ delegates, the panel is unlikely to suggest changes to the current plan, allowing eight member countries to raise oil production by 548,000 barrels per day in August. However, one source cautioned that it may still be too early to draw firm conclusions.
OPEC+ is expected to complete the full return of 2.2 million barrels per day of the additional voluntary supply cuts by the end of September.
