Oil Prices surges 2% post US EU Trade Pact

Oil prices rose 2% on Monday after a trade deal between the U.S. and the European Union, following which the U.S. President Donald Trump’s announcement that he would shorten the deadline for Russia to end its war in Ukraine or face sanctions.

Brent crude futures were up $1.36, or 2%, at $69.80 a barrel, by 10:58 a.m. EDT (14:58 GMT), while U.S. West Texas Intermediate crude rose $1.33, or 2%, at $66.49. Brent touched its highest price in 10 days after Trump said he was reducing the 50-day deadline he gave Russia over its war in Ukraine to 10-12 days.

The deal between the U.S. and EU and a possible extension of the U.S.- China tariff pause is also supporting global financial markets and oil prices, said Tony Sycamore, a market analyst at IG.

The framework trade pact with the EU announced on Sunday sets a 15% U.S. import tariff on most EU goods. Trump also said it called for $750 billion of EU purchases of U.S. energy in the coming years.

“Europe is going to have to give up a big percentage of everything they’re getting from Russia“, said Phil Flynn, senior analyst with Price Futures Group. “Not only does it (the trade pact) give U.S. producers a huge boost with this commitment, it also puts more pressure on Russian President Vladimir Putin to come to the table”.

Senior U.S. and Chinese officials are meeting in Stockholm on Monday to try to extend their tariff truce before an August 12 deadline. The U.S.-EU deal removed another layer of uncertainty, and the focus seems to be shifting back towards fundamentals, said Tamas Varga, an analyst at PVM, adding that a strong dollar and falling Indian oil imports have weighed on crude prices.

On the supply side, an OPEC+ panel on Monday stressed the need for full compliance with oil production agreements, ahead of Sunday’s separate gathering of eight OPEC+ members to decide on increasing oil output for September. ING expects OPEC+, the group that includes the Organization of the Petroleum Exporting Countries and allies such as Russia, to at least complete the full return of 2.2 million barrels per day of additional voluntary supply cuts by the end of September.

US LNG producers climb as EU agrees to $750 billion in energy purchases –

Liquefied natural gas developers led gains for U.S. energy companies in early trading on Monday, after the European Union pledged $750 billion worth in strategic purchases as part of a sweeping trade pact.

The framework trade deal, which ended months of uncertainty for industries and consumers on both sides of the Atlantic, calls for strategic purchases, covering oil, gas, and nuclear fuel, during U.S. President Donald Trump’s term in office.

NextDecade, Venture Global, and Cheniere Energy jumped between 3.5% and nearly 7%, with the deal bolstering the prospects for American LNG exporters as they expand to meet growing demand for cleaner-burning fuels. While, Uranium Miner Energy Fuels rose nearly 4%.

The U.S. became the world’s biggest LNG supplier in 2023, surpassing Australia and Qatar, as surging global prices fed demand for more exports, due in part to supply disruptions and sanctions linked to Russia’s 2022 invasion of Ukraine. Oil prices, rose over 2%, with the S&P 500 energy sector up by 1%.

“Terms of the EU-U.S. trade deal were at the forefront, with the 15% tariff level better than feared (30% was apprehended previously)”, said Ashley Kelty, an analyst at Panmure Liberum. “This should see less of a drag on industrial activity between the two“.

Still, Kelty noted the deal could weigh on gas prices. “The demand for the EU to buy more U.S. energy will see more U.S. LNG imports in the future“, Kelty said, signalling a potential supply glut.

Team Maverick