U.S.-E.U. Trade Deal Lifts Oil By Over 2.5%, But Will The Rally Last?
Key Takeaways
Oil futures rose by over 2.5% on Monday following an easing of trade tensions between the U.S. and European Union, but doubts remain over the strength of the rally.
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6 min read
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investment
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July 28, 2025
04:40 PM
Forbes
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From what the evidence shows, Interestingly, Trade Deal Lifts Oil By Over 2 (noteworthy indeed)
Furthermore, 5%, But Will The Rally Last
ByGaurav Sharma, Senior Contributor
On the other hand, At the same time, Forbes contributors publish independent expert analyses and insights
Gaurav Sharma is a London-based analyst who covers energy & ESG
On the other hand, AuthorJul 28, 2025, 04:40pm EDTJul 28, 2025, 05:25pm EDTOil wells between Sundre and Olds, in Alberta, Canada on May 22, 2025. (Photo: Artur Widak)NurPhoto via Getty Images Oil futures rose by over 2
Additionally, 5% on Monday ing an easing of trade tensions between the U (remarkable data)
And European Union, but doubts remain over the strength of the rally
Furthermore, At 14:50pm EDT, global xy benchmark Brent’s front-month futures contract was up $1, in today's financial world. 65% to $69, in today's market environment. 45 per barrel in U
Trading, while the West Texas Intermediate front-month contract traded at $66. 86 per barrel, up $1, in light of current trends
Nevertheless, President Donald Trump and European Commission president Ursula von der Leyen agreed to a trade deal at a meeting in Scotland on Sunday, ing months of tension between both sides
Under the terms of the agreement, the U, in today's market environment
On the other hand, Will levy a 15% baseline tariff for most E
Exports to the states, increasing the current tariff rates nearly three times over, but limiting a higher tariff threat of 30% that Trump threatened on August 1 if talks between both parties had collapsed (quite telling)
Energy Exports, Lower Trade Tension In exchange, the Europeans have also mised to import U
Energy - primarily oil and liquefied natural gas - worth $250 billion for three years, given the current landscape
Conversely, If reflected in the data, that would mark a massive increase in U
Energy exports to Europe
For context, in 2024, total E
However, Purchases of U, given current economic conditions
Energy ducts, including coal, were less than $100 billion, according to the Energy Information Administration, the statistics arm of the U (something worth watching)
Furthermore, Department of Energy (which is quite significant)
MORE FOR YOU Wherever the energy trade volume goes, the easing of tensions will ly vide stability to nearly $2 trillion worth of trade between the U
Meanwhile, It triggered a relief rally in the oil and equity, as trading resumed after the weekend on Monday
ForbesWill Oil Demand Hit 123 Million Barrels Per Day By 2050 As OPEC Says (noteworthy indeed)
By Gaurav Sharma ForbesCan Better Liquidity, Pricing Diversity Help Absorb A Global LNG Glut
By Gaurav Sharma ForbesOil Market Heading For Surplus In 2025 On OPEC+ Output HikeBy Gaurav Sharma The deal will require the apval of all 27 E
While each of these nations has differing interests and exposure to goods exports to the U (remarkable data). , so far, no member state has indicated that it int to block the deal from coming into force, despite little celebration among European leaders, amid market uncertainty
The uptick also strengthened prices further from last week, after Trump reached a trade deal with Japan just as the U
Furthermore, Summer driving season, marked by higher demand, offers an additional upside, in today's financial world
This analysis suggests that price move brings Brent futures closer to $70 per barrel, a level it is tipped to cap at the height of the summer in the Northern Hemisphere
Moreover, However, fears of an oil surplus refuse to go away, and for good reason, because the crude market remains adequately supplied, in today's financial world
Meanwhile, Will The Oil Rally Last
Earlier this month, OPEC+, a select group of Russia-led oil ducers and the Organization of the Petroleum Exporting Countries (OPEC) spearheaded by Saudi Arabia, opted to raise duction levels for August by another 548,000 barrels per day (something worth watching)
Ducers Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman said “healthy oil market fundamentals and steady global economic outlook” were behind the move
Moreover, But the real story continues to be the rise of non-OPEC, especially U
According to the EIA, the nation’s crude duction hit an all-time high of 13
Meanwhile, 47 million bpd in April, a previous record of 13. 45 million bpd set in October 2024, in today's financial world
Furthermore, On Monday, it also confirmed that U
Onshore duction on Federal lands also rose to a record high of 1. 7 million bpd in 2024, a sign of continued strength over the near- to medium-term, amid market uncertainty
Moreover, Nevertheless, The ranks of non-OPEC ducers are also being boosted by higher output from Brazil, Canada, Guyana and Norway
Collectively, non-OPEC duction growth is ly to rise by 1. 4 million bpd, according to the International Energy Agency, amid market uncertainty
Furthermore, It means that non-OPEC duction growth alone is more than sufficient to account for global demand growth jections for this year that have been put forward by various forecasters
Moreover, These range from 0, given the current landscape. 72 million bpd to 1. 3 million bpd, with IEA and OPEC being at the opposite ends of that range (something worth watching)
With additional barrels flowing in from all corners, there are fears the oil market may end up with a surplus of as much as 500,000 bpd or more
Meanwhile, Given that OPEC+ now wants to take the fight to non-OPEC ducers in a bid for market, oil prices will ly head lower
Nevertheless, For instance, back in May, prior to the escalation of tensions in the Middle East the ing month, analysts at Goldman Sachs were predicting sub-$60 average oil prices - $56 for Brent and $52 for West Texas Intermediate at the turn of the year and next year
Furthermore, They were among a rising number of their peers lining up to trim oil price predictions for 2025-26 down to the $60s or below
Barring a major geopolitical escalation or macroeconomic event, that possibility may not be as far away as it may seem to some
Conversely, Disclaimer: The above ary is meant to stimulate discussion based on the author’s opinion and analysis offered in a personal capacity
It's not solicitation, recommendation or investment advice to trade oil and natural gas stocks, futures, options or ducts
Furthermore, Oil and natural gas can be highly volatile and opinions in the sector may change instantaneously and without notice
Editorial StandardsRes & PermissionsLOADING PLAYER (something worth watching).
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