Oil prices rose on Tuesday after the United States and China extended their tariff truce, easing concerns over the escalation of the trade war between the world’s two largest economies and its potential impact on economic growth and fuel demand.
Brent crude gained 0.2% to reach $66.77 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.1% to $64.04.
U.S. President Donald Trump announced an extension of the tariff truce with China until November 10, in a move aimed at avoiding additional tariffs on Chinese goods as American retailers prepare for the year end holiday season. This extension boosted hopes for a trade agreement between Washington and Beijing, which could spare the global economy from the negative consequences of a full scale trade war that might weigh on energy demand and oil prices.
Oil prices also received support from fresh signs of weakness in the U.S. labor market, increasing expectations that the Federal Reserve will cut interest rates at its upcoming meeting in September. A rate cut typically stimulates economic activity and boosts energy demand.
At the same time, investors are awaiting U.S. inflation data expected later, which could play a role in shaping the future direction of U.S. monetary policy.
Meanwhile, U.S. President Donald Trump is set to meet Russian President Vladimir Putin in Alaska on Friday to discuss ways to end the war in Ukraine. Markets are closely watching this meeting for any geopolitical surprises that could affect supply flows or lead to changes in sanctions regimes.
The meeting comes amid mounting U.S. pressure on Russia, with Washington threatening secondary sanctions on countries that purchase Russian oil, such as China and India, if no peace deal is reached. Reports indicated that Trump had given Moscow a deadline until last Friday to reach an agreement or face new sanctions targeting buyers.
The U.S. is also pressuring Beijing to halt its purchases of Russian oil, with Trump hinting at imposing secondary tariffs on China if it fails to comply. However, the likelihood of such sanctions being enforced decreased ahead of the Trump Putin meeting on August 15, helping to calm market concerns.
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