Oil prices steadied during early trading in Asia on Tuesday, following a sharp rally the previous day. The gains were driven by renewed geopolitical tensions and improved sentiment around U.S. trade negotiations, both of which bolstered the outlook for global energy demand.
Crude futures remained elevated after U.S. President Donald Trump escalated pressure on Russia, demanding swift action to end the war in Ukraine. The announcement sparked concerns about further sanctions and potential disruptions to oil supply from one of the world’s key producers.
Brent crude futures for September delivery edged up 0.1% to $70.09 per barrel at 21:53 ET (01:53 GMT), while U.S. West Texas Intermediate (WTI) held flat at $66.74. Both benchmarks surged more than 2% on Monday following Trump’s comments.
Trump Warns Russia, Threatens New Sanctions
Trump’s decision to impose a tighter timeframe on Russia — just 10 to 12 days to make progress toward ending the war — marked a sharp escalation in rhetoric.
The threat of sanctions if Moscow fails to comply heightened supply concerns, with analysts warning of serious market consequences if action is taken.
“No deal could see Russia facing tougher US sanctions, along with the US imposing secondary tariffs of 100% on trading partners that import Russian oil,” ING analysts wrote in a research note.
They added that, “If imposed and enforced strictly, it would cause a significant shift in the oil outlook,” especially for countries like India, China, and Turkey, which have significantly increased imports of discounted Russian crude. These buyers, the analysts noted, must now consider the potential costs of U.S. penalties against the appeal of cheap oil.
Trade Agreement with EU Boosts Market Sentiment
Markets also responded to trade developments after the U.S. and European Union reached a long-awaited agreement over the weekend. The deal reduced proposed tariffs on European goods to 15%, down from the initially threatened 30%, and included a large energy commitment.
The EU agreed to purchase $750 billion worth of U.S. energy exports over the coming years, a move analysts say could help anchor long-term oil demand.
This agreement, coupled with easing trade tensions, lifted investor confidence and supported oil prices in the short term.
OPEC+ Monitoring Output, Fed Meeting Looms
Attention is also turning to the upcoming OPEC+ ministerial meeting scheduled for August 3. Ahead of the gathering, a committee within the group urged member nations to comply fully with existing production quotas. Discussions may include a potential production increase for September.
Meanwhile, financial markets are awaiting the outcome of this week’s U.S. Federal Reserve meeting, which begins Tuesday. While no change in interest rates is expected — with the target range forecast to stay at 4.25%–4.50% — investors are looking for guidance on the Fed’s policy outlook amid mixed economic signals.
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