Oil prices rose on July 28 after the United States struck a trade deal with the European Union and may extend a tariff pause with China, allaying fears of higher tariffs that could hurt economic activity and curb fuel demand.
Points of attention
- The trade deal between the US and the European Union and the tariff pause with China have contributed to the rise in oil prices and supported global financial markets.
- A prolonged trade war could lead to a decrease in fuel demand and negatively impact the global economy.
- The US-EU trade agreement sets a lower import tariff on most EU goods, helping avert a larger trade war that could have further affected fuel demand.
Oil prices rise due to US-EU trade deal
Brent crude futures rose 20 cents, or 0.29%, to $68.64 a barrel, while the price of U.S. West Texas Intermediate crude rose 15 cents, or 0.23%, to $65.31 a barrel.
The trade deal between the US and the European Union and a possible extension of the tariff pause between the US and China are supporting global financial markets and oil prices, said IG Markets analyst Tony Sycamore.
Given the risk of a prolonged trade war and the importance of gradually reducing tariff payment deadlines in August, markets reacted positively.
The framework trade agreement between the US and the EU, signed on July 27, sets a 15% import tariff on most EU goods, half the threatened rate.
The deal averted a larger trade war between the two allies, which account for nearly a third of global trade, and could curb fuel demand.
A meeting of senior US and Chinese negotiators is scheduled for July 28 in Stockholm to extend until August 12 the truce that prevents a sharp increase in tariffs.
Oil prices fell to their lowest level in three weeks on Friday amid concerns about global trade and expectations of increased oil supplies from Venezuela.
State oil company PDVSA is preparing to resume operations at its joint ventures under conditions similar to those of the Biden era, once US President Donald Trump restores permits for its partners to operate and export oil under swaps, company sources said.
JP Morgan analysts said global oil demand rose by 600,000 barrels per day in July compared to the same period last year, while global oil inventories rose by 1.6 million barrels per day.
