Oil Rises As EU Deal With US Allays Fears Of Harmful Trade War

Oil rose after the US and European Union reached a trade deal ahead of President Donald Trump’s Aug. 1. deadline, avoiding a tariff war that could have hurt the global economy.

Brent was near $69 a barrel after closing 1.1% lower on Friday. Trump said the EU had agreed to purchase $750 billion in American energy products, although he and European Commission President Ursula von der Leyen appeared to differ on some key details of the agreement. 

While the deal supports sentiment, the market had already been given some indication of tariff levels from recent agreements, said Soni Kumari, a commodity strategist at ANZ Group Holdings Ltd. Oil prices should remain in the current range until there’s clarity around further trade pacts and the outcome from the upcoming OPEC+ meeting on supply, she added.

Trump’s trade policies and threats of retaliation from targeted countries for months have raised concerns about the outlook for energy demand should global economic growth slow down, while the decision by OPEC+ to rapidly increase output has put the market on track for a supply glut later this year.

An OPEC+ committee will convene later on Monday to assess the oil market ahead of a meeting on Sunday to decide on production policy for September. The group is expected to hike its quota again, according to delegates.

US and Chinese officials are scheduled to meet on Monday for trade talks, and the South China Morning Post reported that the two countries are expected to extend their tariff truce, according to people it didn’t identify.

• Brent for September settlement was 0.8% higher at $69.00 a barrel as of 10:35 a.m. in London.

• WTI for September delivery rose 0.8% to $65.68 a barrel.