Oil prices jump 2pc after US-EU deal and Trump’s Russia warning

NEW YORK: Oil prices climbed two per cent on Monday after the United States and European Union struck a trade deal and US President Donald Trump announced a shortened deadline for Russia to end its war in Ukraine or face renewed sanctions.

Brent crude rose by $1.42, or 2.1pc, to settle at $69.86 a barrel, while US West Texas Intermediate (WTI) gained $1.40, or 2.2pc, to close at $66.56.

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Brent briefly touched a 10-day high following Trump’s announcement that he was reducing the 50-day ultimatum given to Moscow to just 10–12 days.

The trade pact between Washington and Brussels, revealed over the weekend, includes a 15pc US tariff on most EU goods and a commitment by Europe to purchase $750 billion worth of US energy over the coming years. Analysts said the deal could significantly reduce European reliance on Russian oil and gas.

“This gives US producers a massive boost and increases pressure on President Putin to seek a resolution,” said Phil Flynn, senior analyst at Price Futures Group.

Market optimism was further supported by talks between US and Chinese officials in Stockholm, aimed at extending a tariff truce ahead of the August 12 deadline. Analysts noted that the easing of geopolitical uncertainty helped shift investor focus back to market fundamentals.

However, a strong dollar and falling Indian crude imports are still seen as weighing factors on oil demand, said Tamas Varga of PVM.

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On the supply side, an OPEC+ panel met Monday and reaffirmed the importance of compliance with production cuts. A separate meeting of key OPEC+ members, set for Sunday, will decide on potential output increases for September.

Analysts at ING said they expect the group to fully unwind 2.2 million barrels per day of voluntary supply cuts by the end of September.

Gold price drops

On the other hand, gold prices fell to their lowest level in nearly two weeks on Monday, as a framework trade agreement between the United States and European Union ahead of the August 1 tariff deadline boosted appetite for risk assets.

Spot gold was down 0.1% at $3,332.18 per ounce, as of 0208 GMT, after touching its lowest level since July 17. U.S. gold futures edged 0.1% lower to $3,331.60.