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July 28, 2025 — Oil prices rose modestly in early trading on Monday as easing trade tensions between the United States and key partners, including the European Union and China, boosted investor sentiment and eased concerns over potential declines in fuel demand.

Brent crude futures climbed 22 cents, or 0.32%, to $68.66 per barrel by 0035 GMT, while U.S. West Texas Intermediate (WTI) crude rose by the same margin to $65.38 a barrel, according to Reuters.

Analysts attributed the uptick to improved trade prospects after Washington and Brussels reached a framework agreement over the weekend, slashing proposed tariffs in half and averting a broader economic conflict.

“The US-EU trade deal and the possibility of extending the tariff truce with China are providing broad support to global markets, including oil,” said Tony Sycamore, market analyst at IG Markets.

Under the agreement, the United States will impose a 15% tariff on most European Union goods—half the initially proposed rate—marking a de-escalation between the transatlantic allies who together represent nearly one-third of global trade. Analysts feared that a full-blown trade conflict could hamper economic activity and suppress global energy demand.

Meanwhile, senior U.S. and Chinese officials are scheduled to meet in Stockholm on Monday in an attempt to extend their ongoing trade truce ahead of the looming August 12 deadline. Markets are closely watching the talks, which could have significant implications for global supply chains and energy consumption.

Supply Concerns Cap Gains

Despite the positive trade developments, further gains in oil prices were capped by expectations of increased crude supply.

Venezuela’s state-owned oil firm, PDVSA, is reportedly preparing to resume operations at several joint ventures, pending reauthorization from the United States. The move could see the return of swap-based exports under licenses similar to those issued during the Biden administration, as President Donald Trump is expected to reinstate authorizations for foreign partners.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are scheduled to hold a key policy meeting at 1200 GMT on Monday. While the alliance is not expected to revise its current plan to raise production by 548,000 barrels per day (bpd) in August, markets remain alert to any signals of future policy shifts.

“The group is keen to regain market share while summer demand is strong enough to absorb the extra barrels,” said one OPEC+ delegate. However, another source noted it was “too early to say” whether the group might adjust its plans.

According to JP Morgan analysts, global oil demand increased by 600,000 bpd in July year-on-year, while inventories rose by 1.6 million bpd, suggesting a fragile balance between supply and demand.

Geopolitical Risks Loom

In the Middle East, fresh geopolitical tensions added an element of uncertainty. Yemen’s Houthi rebels warned Sunday that they would target vessels associated with businesses operating in Israeli ports—regardless of the ships’ nationalities. The announcement comes as part of what the group calls the “fourth phase” of its military campaign in response to the ongoing Gaza conflict.

Analysts caution that while current price gains are modest, geopolitical flashpoints and production shifts could quickly alter the oil market’s trajectory.