West Texas Intermediate (WTI) crude oil extended its gains into a second day, trading near $61.50 per barrel during Monday’s Asian session. The price rally is driven by easing trade war fears between the United States and the European Union, coupled with rising geopolitical risks in the Middle East.
Following a phone call between US President Donald Trump and European Commission President Ursula von der Leyen on Sunday, Bloomberg reported an extension of the threatened 50% EU tariff deadline from June 1 to July 9. Von der Leyen affirmed the EU’s readiness for trade negotiations but stressed the need for additional time to finalize a deal.
The threat of tariffs had earlier dampened global economic growth prospects and weighed on energy demand after Trump’s announcement last Friday on Truth Social. However, the tariff extension helped ease these concerns, allowing oil prices to recover.
Geopolitical tensions also bolstered crude prices. Israel’s military plans to capture 75% of the Gaza Strip within two months raise fears of a wider regional conflict. Meanwhile, stalled US-Iran nuclear talks have reduced expectations of increased Iranian oil supply entering global markets.
On the supply front, OPEC+ may cap further price gains. Reuters reports the group could increase production by 411,000 barrels per day in July and potentially phase out the remaining voluntary cuts of 2.2 million barrels per day by October, limiting upside for crude.
