Oil prices moved higher in early Asian trade on Monday after the U.S. and EU reached a tariff agreement, averting a major trade war. The framework sets U.S. tariffs on most EU goods at 15%, down from previously threatened levels, and includes EU commitments to purchase U.S. energy and invest in American industry. The agreement helped shore up demand sentiment—but traders remain cautious ahead of what is set to be a big week for oil prices.
Attention now turns to the OPEC+, with a Joint Ministerial Monitoring Committee convening on Monday ahead of the August 3 full ministerial meeting setting September output. Expectations are that the panel is likely to maintain its plan to boost production by 548,000 barrels per day in August—and likely another 548,000 bpd in September, pushing the unwind of 2.2?million bpd in voluntary cuts close to completion. ING analysts have warned that there is still room for a more aggressive hike, potentially dragging oil prices down.
Simultaneously, markets await key developments from the U.S. Federal Reserve. The rate?setting committee begins its two?day meeting Tuesday, with the policy decision on Wednesday. While a rate cut is not expected, investors will closely parse guidance on the likelihood of cuts later in 2025.
Traders will also digest two critical data points this week: the June PCE inflation index and the July jobs report. Strong readings could delay Fed easing and dent oil demand optimism; weaker prints could stoke bullish sentiment.
Geopolitical and trade threads remain influential. Reports of Russia curbing gasoline exports have lent support to price momentum, even as potential Venezuelan crude restarts linger in the background as a future supply wildcard. Meanwhile, China trade negotiations and escalating Middle East tensions persist as risk premiums in oil markets.
While the U.S.–EU deal may have provided an early boost for oil prices, that upward momentum could quickly fade if OPEC+ confirms further supply increases, or if U.S. inflation and jobs data come in stronger than expected.
It’s set to be a big week in oil markets.
By Charles Kennedy for Oilprice.com
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