Oil prices edged upward on Tuesday, supported by improving trade relations and geopolitical developments, particularly surrounding the Russia-Ukraine conflict.
Brent crude mid-Tuesday climbed by 22 cents (0.3%) to reach $70.26 per barrel, its highest since July 18. U.S. West Texas Intermediate (WTI) crude followed suit, rising 27 cents (0.4%) to $66.98 per barrel.
This modest gain followed a more substantial increase of over 2% in the previous trading session.
The oil market responded positively to easing tensions in international trade, especially between the United States and the European Union.
According to Reuters, a recent trade accord between the two entities introduced a 15% import tariff on most EU goods but managed to avert a larger trade confrontation. Analysts believe that a deeper conflict could have disrupted up to a third of global trade flows, diminishing energy demand forecasts.
The agreement also outlines ambitious commitments from the EU, including purchasing $750 billion worth of American energy over three years. Analysts, however, remain sceptical about the feasibility of this pledge. Additionally, European firms are expected to invest approximately $600 billion in the U.S. during President Donald Trump’s second term.
In parallel, U.S. and Chinese economic negotiators gathered in Stockholm for continued talks, aiming to resolve long-standing trade disagreements and prevent further escalation between the world’s two largest economies.
President Trump has also taken a tougher stance on Russia, giving Moscow a “10 or 12 days” ultimatum to show progress toward ending its war in Ukraine. The President warned of new sanctions targeting both Russia and countries importing its commodities if concrete steps were not taken.
“Oil prices rallied after President Trump said he would shorten the deadline for Russia to come to a deal with Ukraine to end the war, raising supply concerns,” ING analysts observed in a recent note.
Meanwhile, investors are also closely monitoring the outcome of the U.S. Federal Open Market Committee’s two-day meeting scheduled for July 29–30. Although interest rates are expected to remain steady, Priyanka Sachdeva, a senior market analyst at Phillip Nova, anticipates the Fed may signal a dovish outlook in response to signs of cooling inflation.
