Oil prices experienced an increase, driven by optimism regarding a prospective trade agreement between the U.S. and the EU, the possibility of a tariff truce between the U.S. and China, and a more urgent timeline set by President Trump for Russia to address the situation in Ukraine. The agreement between the U.S. and the EU successfully prevented a significant trade conflict, as trade negotiations between the U.S. and China remain ongoing.

Oil extended gains on Tuesday, buoyed by optimism surrounding enhanced economic activity following the U.S.-EU trade agreement, a prospective U.S.-China tariff resolution, and President Donald Trump’s expedited timeline for Russia to conclude the Ukraine conflict. Brent crude futures experienced an increase of 24 cents, representing a rise of 0.34%, reaching $70.28 per barrel at 0000 GMT. Meanwhile, U.S. West Texas Intermediate crude stood at $66.93 per barrel, reflecting an uptick of 22 cents, or 0.33%.

Both contracts concluded the previous session with an increase exceeding 2%, while Brent reached its peak level since July 18 on Monday. The trade agreement between the United States and the European Union, which imposes a 15% import tariff on the majority of EU goods, has effectively averted a full-scale trade war between these two significant allies. Such a conflict would have had far-reaching consequences, potentially affecting nearly a third of global trade and negatively impacting the outlook for fuel demand.

Oil prices received support from reports regarding a potential extension of the trade truce between the U.S. and China, as senior economic officials from both nations convened in Stockholm on Monday for over five hours of discussions. Discussions are anticipated to recommence on Tuesday. Meanwhile, Trump established a new deadline on Monday of “10 or 12 days” for Russia to demonstrate progress in resolving the conflict in Ukraine, or else confront sanctions. Trump has issued a warning of sanctions against both Russia and purchasers of its exports should there be no advancement in negotiations.

ANZ senior commodity strategist Daniel Hynes noted, “Trump’s comments reignited fears that Russia’s oil flows would be impacted.” “This also comes on the back of the latest sanctions package by the EU against Russia, including a lower price cap on the country’s crude and the import of refined products made from Moscow’s oil in other countries,” Hynes stated.