Rise in Oil Prices Supported by Extension of Trade Truce Between Washington and Beijing

Global oil markets saw a significant rise on Tuesday, August 12, supported by the decision of the United States and China to extend the trade truce between them, alleviating concerns about a decline in crude oil demand in the world's two largest oil-consuming economies.

Brent crude futures rose by 0.3% to reach $66.89 per barrel, while West Texas Intermediate crude increased by 0.36% to $64.19 per barrel. This rise came after the White House announced that President Donald Trump signed an executive order to extend the customs truce with China for an additional 90 days, just hours before the restoration of U.S. tariffs on Chinese imports to their high levels.

The decision provided a new glimmer of hope for a possible permanent agreement between the two countries, which could prevent a major trade war between the world's largest economies. In this regard, analysts warned that the continuation of the trade dispute could slow global economic growth, negatively impacting global oil demand and contributing to a decline in prices.

In a related context, investors are looking forward to the anticipated meeting between Presidents Trump and Putin scheduled for August 15 in Alaska, which will focus on discussing ways to end the Ukrainian crisis. These negotiations come amid rising U.S. warnings of imposing new sanctions on countries importing Russian oil, primarily China and India, if efforts to achieve peace fail.

For his part, Daniel Hynes, a commodities expert at ANZ Bank, commented: "Any peace agreement between Russia and Ukraine would eliminate the risk of disruptions to Russian supplies that have been looming over the market."

It is noteworthy that Trump had issued an ultimatum to Russia last week to reach a solution to the Ukrainian crisis, threatening to impose secondary sanctions on buyers of Russian oil, while applying intense pressure on both India and China to reduce their imports of Russian crude. However, these threats have begun to lose momentum as the meeting between the leaders approaches.

In a separate context, oil markets are awaiting the release of U.S. inflation data later today, which may provide important indicators regarding the monetary policy direction of the Federal Reserve, as any move towards lowering interest rates is expected to provide additional support for oil prices.