Oil prices rise 1% on trade war relief, US pressure on Russia
Brent crude futures were up 95 cents, or 1.36%, at $70.99 a barrel at 12 p.m. EDT (1600 GMT), having touched their highest since June 23, while U.S. West Texas Intermediate crude was at $67.70, up 99 cents, or 1.48%.
Both contracts settled more than 2% higher in the previous session.
The trade agreement between the United States and the European Union, while imposing a 15% import tariff on most EU goods, sidestepped a full-blown trade war between the two major allies that would have rippled across nearly a third of global trade and dimmed the outlook for fuel demand.
Oil rises on US-EU trade deal
'There is definitely some optimism around the trade deals,' said Bob Yawger, director of energy futures at Mizuho. 'It's not perfect, especially for the Europeans, but it is better than it could have been by a long shot.'
The agreement also calls for $750 billion of EU purchases of U.S. energy over the next three years, which analysts say the bloc has virtually no chance of meeting, while European companies are to invest $600 billion in the U.S. over Trump's second term.
Top economic officials from the U.S. and China finished meetings in Stockholm that were aimed at resolving longstanding economic disputes and stepping back from an escalating trade war between the world's two biggest economies.
Trump set a new deadline on Monday of '10 or 12 days' for Russia to make progress toward ending the war in Ukraine. Trump has threatened sanctions on both Russia and buyers of its exports unless progress is made.
'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 said in a note.
Market participants are also waiting to hear the outcome of the U.S. Federal Open Market Committee meeting on Tuesday and Wednesday. The Fed is widely expected to hold rates but could signal a dovish tilt amid signs of cooling inflation, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.
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Despite being tethered economically and strategically to China, Islamabad is able to carve an advantage from a transactional, mercurial and unpredictable Trump White House, under the overall environment of Sino-US hostility. From being a vanguard nation in the Chinese BRI through CPEC, Pakistan not only secured a deal for American oil investment, but it also earned public endorsement from President Trump. In the last fiscal year, Pakistan's exports to the US stood at $6 billion, against $2.4 billion worth of imports. The ensuing surplus of $3.7 billion was worrying for President Trump. However, Pakistan under the new 19% tariff is still at relative advantage, compared to India's 25%, Bangladesh's 20%, Iraq's 35%, Vietnam's 20% and 19% for Malaysia, Thailand and Indonesia. Pakistan, in trade negotiations, secured duty-free access to over 4,100 American products. Avoiding bloc politics, Pakistan's diplomatic work endears it today to the world powers — China, the US and Russia — increasingly through its geo-strategic relevance, and gutsy and matured dealings with a bellicose and arrogant India. Islamabad's foreign service understands that 'survival and prosperity depend on cultivating relationships with all major players'. It has been able to balance the dictates of BRI/CPEC through increasing cooperation with the US on Afghanistan, counterterrorism, and now, potentially on minerals, oil and gas. The oil deal marks a watershed in exploiting Pakistan's untapped hydrocarbons with American money and technology. These "fourth largest" reserves would catapult Pakistan from energy import to export, rewriting the region's geo-economics. Mr Bhattacharya admires "Pakistan's astonishing ability to dance on the diplomatic tightrope — undaunted, unbowed, and, for now, undefeated".
