Oil prices rose on Monday after the U.S. reached a trade deal with the European Union and may extend a tariff pause with China, reducing concerns that potentially higher levies would limit economic activity and impact fuel demand.

Brent crude futures inched up 22 cents, or 0.32 per cent, to $68.66 a barrel by 0035 GMT, while U.S. West Texas Intermediate crude was at 65.38 dollars a barrel, up 22 cents, or 0.34 per cent.

The U.S.-European Union trade deal and a possible extension in the U.S.-China tariff pause are supporting global financial markets and oil prices, IG markets analyst Tony Sycamore said.

The United States and the European Union struck a framework trade agreement on Sunday that will impose a 15 per cent import tariff on most EU goods, half the threatened rate. The deal averted a bigger trade war between two allies that account for almost one-third of global trade and could crimp fuel demand.

Additionally, senior U.S. and Chinese negotiators will meet in Stockholm on Monday, aiming to extend the truce and keep sharply higher tariffs at bay ahead of the August 12 deadline.

Oil prices settled on Friday at their lowest in three weeks as global trade concerns and expectations of more oil supply from Venezuela weighed.

Venezuela’s state-run oil company PDVSA is getting ready to resume work at its joint ventures under terms similar to Biden-era licenses, once President Donald Trump reinstates authorisations for its partners to operate and export oil under swaps, company sources said.

Although prices rose slightly on Monday, the prospect of OPEC+ further easing supply curbs limited the gains. A market monitoring panel of the Organization of the Petroleum Exporting Countries and its allies is set to meet at 1200 GMT on Monday.

It is unlikely to recommend altering existing plans by eight members to raise oil output by 548,000 barrels per day in August, four OPEC+ delegates said last week. Another source said it was too early to say.

The producer group is keen to recover market share, while summer demand is helping to absorb the extra barrels.

JP Morgan analysts stated that global oil demand rose by 600,000 barrels per day in July compared to the same period last year, while global oil stocks increased by 1.6 million barrels per day.

In the Middle East, Yemen’s Houthis said on Sunday they would target any ships belonging to companies that do business with Israeli ports, regardless of their nationalities, as part of what they called the fourth phase of their military operations against Israel over the Gaza conflict. 

(Reuters/NAN)