Oil Prices Climb as Trump Extends US-EU Trade Talks Deadline to July

BEIJING, May 26 (Reuters) – Oil prices rose on Monday following U.S. President Donald Trump’s decision to extend the deadline for trade negotiations with the European Union (EU) until July. The move eased concerns about potential U.S. tariffs on the EU that could negatively affect the global economy and reduce oil demand.

Crude Oil Prices Rebound Amid Trade Optimism

As of 04:33 GMT, Brent crude futures gained 26 cents (0.4%) to $65.04 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 24 cents (0.39%) to $61.77 per barrel.

"A nice push higher in crude oil and U.S. equity futures this morning after U.S. President Trump extended the deadline," said Tony Sycamore, market analyst at IG.

Trump agreed to extend the trade talks deadline to July 9 after European Commission President Ursula von der Leyen requested more time to reach a deal.

Market Sentiment Remains Sensitive to Risk Factors

Sycamore noted that trade and tariff headlines, along with broader fiscal concerns, would remain key drivers of risk sentiment and crude oil pricing this week.

Oil prices had already posted modest gains on Friday, with Brent and WTI rising 0.5%, supported by:

Limited progress in U.S.-Iran nuclear negotiations, easing concerns over increased Iranian crude supply.

Pre-holiday buying by U.S. traders ahead of the three-day Memorial Day weekend.

Supporting the bullish momentum, data from Baker Hughes showed that U.S. energy firms cut the number of active oil rigs by 8 to 465 rigs, marking the lowest level since November 2021.

OPEC+ Output Increase May Limit Price Gains

Despite the upward trend, gains were capped by expectations that OPEC and its allies (OPEC+) may decide to boost oil production by an additional 411,000 barrels per day (bpd) for July during next week's meeting.

Suvro Sarkar, lead energy analyst at DBS Bank, said oil markets are already under pressure from OPEC+’s accelerated production strategy and a possible “mini oil price war.”

"Any price gains are likely to be dampened by the OPEC+ decision in coming days," he added.

According to Reuters, the OPEC+ alliance could fully unwind the remaining 2.2 million bpd of voluntary cuts by the end of October, having already raised output targets by about 1 million bpd for April, May, and June.

Warren Patterson, head of commodities strategy at ING, noted that the increased supply from OPEC+ should keep the oil market well-balanced in the second half of 2025.

Conclusion

President Trump’s extension of the U.S.-EU trade talks deadline has provided a short-term boost to oil prices. However, potential supply increases from OPEC+ and ongoing geopolitical uncertainties may limit the upside. Traders should closely monitor developments in trade policy, OPEC+ decisions, and tensions in the Middle East to navigate the evolving energy market landscape.

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Source: CNBC