Oil prices rose on Monday following former U.S. President Donald Trump’s announcement that he would extend the deadline for trade negotiations with the European Union until July, easing market concerns over an immediate tariff escalation that could have dampened global economic activity and energy demand.
Brent crude futures increased by 1.2% to $84.75 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 1.4% to $80.10. The price jump reflects renewed investor optimism after weeks of volatility driven by geopolitical tensions and fears of a renewed U.S.-EU trade war.
Speaking at a rally in Ohio, Trump stated that negotiators from both sides had made “solid progress” and that he would postpone the imposition of a planned 25% tariff on European auto imports, giving the EU until July 31 to reach a broader agreement on trade imbalances and regulatory alignment.
“The EU understands this is their last chance. We’re being fair, but firm,” Trump said, warning that tariffs would still be enacted if sufficient progress isn’t made by the new deadline.
Energy markets responded positively, with traders interpreting the delay as a signal of short-term global economic stability, reducing immediate fears of a slowdown in cross-border trade. Analysts say the move provides temporary relief for energy demand forecasts, especially in Europe, where fears of retaliatory tariffs on U.S. liquefied natural gas (LNG) and crude exports had weighed on sentiment.
“Trump’s move buys time and eases pressure on transatlantic energy flows, particularly U.S. oil exports to Europe,” said Ole Hansen, head of commodity strategy at Saxo Bank. “Markets are breathing a sigh of relief—at least for now.”
The rally in oil prices also follows ongoing supply constraints due to OPEC+ production cuts and geopolitical risks in the Middle East. Israeli operations in southern Lebanon and recent attacks on oil infrastructure in Libya and Iraq have further tightened global supply outlooks.
Meanwhile, the U.S. Energy Information Administration (EIA) forecast last week that global oil demand would grow by 1.1 million barrels per day in the second half of 2025, driven in part by recovering industrial activity in China and stable consumption in India and the U.S.
While the extension of trade talks offered a boost to commodities, analysts caution that uncertainties remain. “The risk of a tariff cliff still exists,” noted Amrita Sen of Energy Aspects. “If talks break down in July, we could see oil give up these gains very quickly.”
For now, energy markets are buoyed by the prospect of diplomatic flexibility, but the focus will soon shift to the next OPEC+ meeting in early June, where producers are expected to review quotas amid rising prices and modest demand growth.
The Trump administration’s economic diplomacy and its impact on oil prices are likely to remain a key factor for global energy markets in the months ahead.
Source: Reuters
