Oil prices rise as apprehensions over trade war lessen
In the world of global energy markets, there's been a flurry of activity that's sending crude oil prices soaring. Let's delve into some of the key factors driving this trend.
Firstly, the US-EU trade agreement, finalized in July 2025, has set ambitious energy purchase targets from the US, amounting to $250 billion annually over the next three years. This commitment includes crude oil, among other energy commodities, and is supportive of oil prices by signaling stronger demand expectations. However, meeting this ambitious goal presents practical challenges, as it would require the EU to significantly increase US crude imports, a feat that's currently beyond their export capabilities [1][3].
The recent US-EU trade deal has also brought a breath of fresh air, avoiding a severe trade war that could potentially dampen fuel demand. This positive market sentiment, coupled with enhanced economic activity prospects, has resulted in a slight rise in Brent crude prices, with similar gains in US West Texas Intermediate crude [2][4].
Tariff adjustments in the agreement primarily concern manufactured goods, with the US raising most EU import tariffs to 15%. However, energy commodities like crude oil generally do not face new tariffs under this deal. Therefore, the direct tariff effect on crude oil prices is limited [3]. Instead, the deal’s impact is more about trade stability, increased US energy exports to the EU, and geopolitical factors influencing supply flows, which collectively support oil prices in the current market context.
Other significant factors include ongoing US-China tariff talks and renewed sanctions pressure on Russian oil flows. These factors have added upward pressure on oil prices due to supply concerns [2][4].
Looking at other developments, Trump has announced plans to reduce the number of days for oil production cuts from 50 to around 10 or 12, though he has not given the exact new date. Meanwhile, the OPEC panel has stressed the need for compliance with production increases, as part of the ongoing effort to unwind 2.2 million barrels per day [5].
In the geopolitical arena, the Houthi rebels in Yemen have threatened to escalate their attacks on merchant ships trading with Israel, passing through the Red Sea and Suez canal. This potential disruption in supply lines could further impact oil prices [6].
In summary, while tariff policies themselves have a limited direct effect on crude oil prices, the broader trade deals and geopolitical dynamics they accompany are currently helping to support modest increases in crude prices around $67–70/bbl levels in mid-2025. The global demand outlook remains steady, with the alliance's internal outlook survey indicating a steady global demand for the rest of 2025 [7]. The 5,48,000 bpd production increase for August appears to be on track [8].
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- The increased US crude oil exports to the EU, as a result of the US-EU trade agreement, are expected to boost the demand for oil in the energy industry, potentially elevating oil prices in the finance sector.
- The ongoing US-China tariff talks and renewed sanctions pressure on Russian oil flows also pose supply concerns, adding upward pressure on oil prices across the oil-and-gas business.
