Oil prices saw a notable uptick on Tuesday, as the United States and China extended their pause on higher tariffs, alleviating fears that a trade war escalation could harm their economies and reduce fuel demand, particularly in the world’s two largest oil consumers.
Crude Oil Futures
- Brent crude futures increased by 26 cents (0.39%) to $66.89 per barrel.
- U.S. West Texas Intermediate (WTI) crude futures rose by 22 cents (0.34%) to $64.18.
Key Developments
U.S. President Donald Trump announced on Monday that the tariff truce between the two largest global economies would be extended for another 90 days. This extension averted the imposition of triple-digit tariffs on Chinese goods and provided relief to U.S. retailers gearing up for the important holiday season.
This development raised hopes that a comprehensive agreement might be reached between the U.S. and China, potentially avoiding a trade embargo. An escalation of tariffs could slow economic growth, potentially reducing global demand for oil and putting downward pressure on prices.
Global Factors Influencing Oil Prices
Investor focus is also shifting towards the upcoming Trump-Putin meeting on August 15 in Alaska, where they are expected to discuss a potential resolution to the ongoing Ukraine conflict.
Heightened pressure from the U.S. on Russia, coupled with the threat of secondary sanctions on countries like China and India buying Russian oil, has weighed on oil trade flows. However, a potential peace agreement between Russia and Ukraine could ease concerns and stabilize the oil market, according to ANZ senior commodity strategist, Daniel Hynes.
Looking Ahead
In addition to the geopolitical developments, U.S. inflation data, set to be released later today, is also on the radar for investors. Any sign that the Federal Reserve may soon reduce interest rates could provide further support for crude prices.
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