Falling oil prices due to escalating trade war concerns, causing anxiety over future fuel demand.
In a significant development, the US and EU have reached a preliminary agreement to reduce tariffs, which has positively influenced oil prices and is expected to support global fuel demand growth. This near-resolution of the trade tensions, which had been a source of concern for the energy market, has historically boosted energy consumption and crude prices.
On Monday, both US West Texas Intermediate (WTI) and Brent crude settled slightly lower, with WTI down 0.44 percent to $65.66 a barrel and Brent crude down 0.40 percent to $68.93 a barrel. However, the markets have been influenced by a larger-than-expected drawdown in US crude inventories, signalling tighter supply dynamics and easing global growth concerns. Brent crude reached around $68.76 per barrel, while WTI hovered near $65-$66 per barrel on July 24, 2025.
The agreement, which reduces the risk of a harsher 30% tariff trade war scenario, has been a relief for the energy market. It removes downward pressure on prices and helps stabilize fuel demand outlooks globally. However, some analysts anticipate oil prices may decline slightly from current levels, as the markets have already priced in the easing of trade tensions.
Geopolitical factors such as ongoing Russia-Ukraine tensions and sanctions against Russian oil add complexity to the supply picture but have not overridden the trade deal’s positive impact on demand confidence. Meanwhile, the weaker US dollar is providing some backing for crude, as buyers using other currencies are paying relatively less.
Supply concerns have largely been alleviated by major producers raising output, and since a ceasefire on June 24 ended the conflict between Israel and Iran. However, investors are increasingly worried about the global economy amid US trade policy changes. They are also eyeing the ripple effects of fresh US sanctions on Russian crude.
The trade war may curb fuel demand growth by lowering economic activity. The US has threatened to impose a 30 percent tariff on EU imports on Aug. 1 if a deal is not reached. The EU is exploring a broader set of possible counter-measures against the United States as prospects for an acceptable trade agreement with Washington fade.
In summary, the US-EU trade deal reduces economic uncertainty, supporting a rebound in oil prices and sustaining global fuel demand growth. While near-term price fluctuations may occur due to supply and geopolitical factors, the trade truce is a pivotal factor promoting stable or increased fuel consumption worldwide in the current context.
[1] Source: Bloomberg, Reuters [2] Source: CNBC, Financial Times [3] Source: Forbes, Wall Street Journal
- The relief in the energy market, following the US and EU's agreement to reduce tariffs, is expected to support global fuel demand growth, particularly in Saudi Arabia's oil industry.
- As a result of the easing trade tensions, investors in the art and finance sectors may find more stability, which could potentially stimulate business growth in regions like Arabia.
- The positive impact of the trade deal on demand confidence might encourage new investments in the energy sector, particularly in the business and finance sectors of Saudi Arabia.
- The news of the US-EU trade deal could influence the local economy of Saudi Arabia, particularly the art and business industries, by reducing economic uncertainty and fostering a more conducive environment for growth.
