The prices of crude oil rose by 2 per cent on Monday after a trade deal between the United States and the European Union (EU), just as the US moved to sanction Russia ahead of a planned deadline, with Brent crude growing by $1.60 or 2.3 per cent to settle at $70.04 a barrel, and the US West Texas Intermediate (WTI) crude increasing by $1.55 or 2.4 per cent to $66.71 per barrel.
Market analysts warned that the deal between the US and EU and a possible extension of the US-China tariff pause are also supporting global financial markets and oil prices.
The framework trade pact with the EU announced on Sunday sets a 15 per cent US import tariff on most EU goods.
US President Donald Trump also said the deal called for $750 billion of EU purchases of US energy in the coming years.
President Trump also announced that he would shorten the deadline for Russia to end its war in Ukraine or face sanctions, saying he was reducing the 50-day deadline to 10-12 days.
According to market analysts, the trade pact gives US producers a huge boost and also puts more pressure on Russian President Vladimir Putin to come to the table.
If enforced, these measures could dramatically reshape the global oil landscape as President Trump’s warning includes 100 per cent secondary tariffs on any country importing Russian crude. This would place heavy economic pressure on China, India, and Turkey, who have significantly increased Russian oil imports since the start of the war.
US and Chinese officials will meet in Stockholm on Monday to try to extend their tariff truce before an August 12 deadline.
Meanwhile, a strong Dand falling Indian oil imports have weighed on crude prices.
On the supply side, a panel of the Organisation of the Petroleum Exporting Countries and its allies, (OPEC+) on Monday stressed the need for full compliance with oil production agreements.
This comes ahead of Sunday’s separate gathering of eight OPEC+ members to decide on increasing oil output for September. Recall that the sub-group had already increased production from May to August.
This could see the group return to at least complete the full return of 2.2 million barrels per day of additional voluntary supply cuts by the end of September.