WASHINGTON (dpa-AFX) - Crude oil price surged on Monday despite oversupply concerns as the US announcement of a tariff framework agreement with the EU, days after striking a deal with its another major economic partner Japan, cooled down the fears of a big tariff war breakout post August 1.
Today, WTI Crude Oil for September delivery has jumped by $1.72 (or 2.64%), to $66.88 per barrel.
On Sunday, a tariff framework agreement between the US and EU was announced by US President Donald Trump. This allows the US to slap a 15% tariff on all EU exports to the US; much lower than the earlier proposed 30% tariff.
In addition, the EU is now committed to invest heavily in the US energy sector in the forthcoming years.
In Sweden, US and Chinese officials are negotiating today to decide on mutual tariffs.
Earlier this month, frustrated by Russian President Vladimir Putin prolonging the conflict with Ukraine, Trump gave Russia a 50-day deadline for a ceasefire.
Trump also warned that secondary sanctions would be imposed on Russian oil buyers - especially China and India - if Russia fails to comply. Russia ignored his threat though.
Trump has now announced plans to reduce the number of days from 50 to around 10 or 12, though he has not given the exact new date.
Weeks before, the EU's 27 member states introduced their 18th sanctions package against Russia including a lowering of price cap on Russian oil imports. This applied to imports of petroleum products refined from Russian crude oil in any third nation.
India imports crude oil from Russia and processes it to produce diesel, petrol, and jet fuel to export globally to the tune of $5 billion. India and China could suffer larger due to these sanctions.
On the supply side, today in its Joint Ministerial Monitoring Committee meeting, the OPEC panel stressed the need for compliance with production increases (unwinding of 2.2 million barrels per day) on its member nations.
The alliance's internal outlook survey shows a steady global demand for the remaining year 2025. The cartel reportedly plans to increase oil output for September. The 5,48,000 bpd production increase for August appears to be on track though.
Despite the oversupply concerns, on the demand side, oil prices are supported by continuing summer consumption.
On the geopolitical front, Israel's defense minister warned Iran not to threaten Israel and that Israel can attack Iran once again and target Iranian Supremo Leader Ayatollah Ali Khamenei personally.
Early July, the Iranian-military backed Yemen's Houthi rebels attacked and sank two bulk cargo carriers - MV Magic Seas and MV Eternity C - travelling via the Red Sea.
The rebel group has now avowed to escalate their attacks on all merchant ships belonging to 'any company trading with Israel' and passing through Red Sea and Suez canal.
As of now, neither the US nor its allies have intervened in favor of Israel military-wise. The situation though tense, remains calm.
Crude oil being a dollar-denominated commodity, the US Fed's decision on interest rates could steer the dollar value and eventually crude prices.
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