Oil prices in Asian markets edged higher on Monday after slipping to three-week lows, buoyed by news that the United States and the European Union reached a trade agreement easing tariff concerns and raising hopes for stronger energy demand ahead.

By 21:47 ET (01:47 GMT), September Brent crude futures increased 0.3% to $68.66 per barrel, while West Texas Intermediate (WTI) futures rose 0.3% to $65.36 per barrel.

This modest recovery followed last Friday’s dip to three-week lows, which was driven by anticipated boosts in Venezuelan oil exports.

“A trade deal between the US and EU proved positive for sentiment this morning in the oil market. However, attention will likely turn to OPEC+ output policy from September,” ING analysts commented in their report.

Positive Trade Sentiment Fueled by US-EU Framework

Market optimism was lifted by Sunday’s announcement of a broad trade framework between the US and EU. The deal features a 15% tariff on European goods entering the US, a significant reduction from the initially proposed 30%.

Additionally, the EU agreed to purchase $750 billion worth of American energy products over several years. The pact also involves the EU committing to invest $600 billion in the US economy and acquire hundreds of billions of dollars in US military equipment.

By reducing trade frictions, the deal is expected to stimulate economic growth and cross-border trade, both of which drive oil demand through increased transportation and industrial energy consumption.

The energy component of the deal further supported oil prices by reinforcing expectations for sustained US exports, especially of liquefied natural gas and crude oil.

Improved risk sentiment also helped, as fears of an imminent trade war eased. Yet, investors remain cautious as President Donald Trump’s August 1 tariff deadline approaches, seeking clarity on potential shifts in US trade policies.

OPEC+ Supply Adjustments and Fed Meeting in Focus

Despite gains, oil prices remain capped due to expectations of rising supply. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are anticipated to increase production moderately in August. Meanwhile, Venezuelan crude may re-enter global markets should US sanctions be relaxed.

An OPEC+ panel will convene later Monday to assess market conditions ahead of the full committee’s August 3 meeting, where September production targets will be finalized. Media reports suggest another output increase is likely.

“We expect that OPEC+ will at least complete the full return of 2.2m b/d of the additional voluntary supply cuts by the end of September,” ING analysts said.

“This would work out to a supply hike in September of at least 280k b/d. However, there is clearly room for a more aggressive hike,” they added.

Meanwhile, investors are also focused on the Federal Reserve’s upcoming two-day policy meeting starting Tuesday. The US central bank is expected to hold interest rates steady, but market participants will be watching closely for any hints about a possible rate cut later this year.

Key economic data due this week, including the June PCE inflation index and the July jobs report, will further shape market expectations.

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