Oil prices rose on Tuesday as the United States and China extended a pause on higher tariffs, easing concerns an escalation of their trade war would disrupt their economies and crimp fuel demand in the world’s two largest oil consumers.
Brent crude futures gained 26 cents, or 0.39%, to $66.89 a barrel by 0015 GMT, while U.S. West Texas Intermediate crude futures rose 22 cents, or 0.34%, to $64.18.
U.S. President Donald Trump extended a tariff truce with China by another 90 days, a White House official said on Monday, staving off triple-digit duties on Chinese goods as U.S. retailers prepared for the critical end-of-year holiday season.
This raised hopes that an agreement could be attained between the world’s two largest economies, and could help sidestep a virtual trade embargo between them. Tariffs risk slowing down economic growth, which could sap global fuel demand and drag oil prices lower.
Investors are also looking ahead to a meeting between Trump and Russian President Vladimir Putin on August 15 in Alaska to negotiate an end to the war in Ukraine.
The meeting is set amid heightened U.S. pressure on Russia, with the threat of harsher penalties on Russian oil buyers such as China and India if no peace deal is reached that could upset oil trade flows.
“Any peace deal between Russia and Ukraine would end the risk of disruption to Russian oil that has been hovering over the market,” ANZ senior commodity strategist Daniel Hynes wrote in a note.
Trump set a deadline of last Friday for Russia to agree to peace in Ukraine or have its oil buyers face secondary sanctions, while pressing India to reduce purchases of Russian oil.
Washington has also been pressing Beijing to stop buying Russian oil, with Trump threatening to impose secondary tariffs on China.
The risk of those sanctions being enacted has receded ahead of the August 15 Trump-Putin meeting.
Also on the radar is U.S. inflation data later in the day, that could hint at the Federal Reserve’s interest rate path. Any sign that the central bank may cut rates soon would support crude prices.
