Morning Highlights: Oil Prices Rise as Trade Optimism Grows and Trump Pressures Russia

Tuesday, July 29, 2025

Oil prices edged up on Tuesday, marking a fourth day of gains, as optimism over a cooling global trade war and renewed pressure from U.S. President Donald Trump on Russia lifted sentiment. Brent crude reached its highest since July 18, while expectations for a tighter oil market were reinforced by strong refining data from China and recent OPEC+ output policy.

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Market Snapshot (as of 6:30 EST):

• Brent (Sep): $70.23 (▲$0.19)

• WTI (Sep): $66.92 (▲$0.21)

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Global trade tensions ease

Brent and WTI both gained more than 2% on Monday after the U.S. and EU finalized a trade agreement that:

• Avoids a full-blown tariff war.

• Sets a 15% tariff on most EU imports.

• Promises $750 billion in EU purchases of U.S. energy over the next three years—an ambitious goal many analysts view as symbolic.

Top officials from China and the U.S. are also meeting in Stockholm this week, attempting to de-escalate trade tensions ahead of an August 12 tariff deadline.

“The market welcomed the U.S.-EU deal as it removes a big uncertainty and improves the global demand outlook,” said ING analysts.

“If the China talks go well, we could see a double tailwind for oil.”

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Trump tightens the timeline on Russia

President Trump on Monday gave Russia “10 or 12 days” to make meaningful progress toward ending the Ukraine war, threatening sanctions on both Russia and its oil customers if there is no movement. Previous deadlines ranged up to 50 days.

“This shorter deadline has refocused market attention on Russian supply risks,” ING added.

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OPEC+ holds the line on output increases

The OPEC+ Joint Ministerial Monitoring Committee met on Monday and reaffirmed the group’s plan to raise production by 548,000 bpd in August, completing the phased reversal of voluntary cuts.

Kuwaiti Oil Minister Tariq Al-Roumi expressed optimism about oil market fundamentals and reaffirmed Kuwait’s support for efforts to maintain energy security and price stability.

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Kuwait’s finances under strain

Despite its optimism, Kuwait’s budget deficit is forecast to widen in the fiscal year 2025/26 to $20.4 billion, based on an assumed oil price of $68 per barrel. The country remains highly dependent on oil and has struggled to diversify revenues.

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China’s fuel exports surge on strong refining margins

Chinese refiners are taking advantage of stronger refining margins and unused export quotas, with July exports of gasoline, diesel, and other distillates set to hit a 16-month high of 859,000 bpd, up from 796,000 bpd in June (Kpler data).

• Gasoil margins have risen >50% since March, exceeding $20/barrel.

• China’s refinery runs in June hit 15.2 million bpd, the highest since Sept 2023.

• Diesel exports may continue to rise, especially as new EU sanctions target refined fuels from Russian crude.

“China’s refiners are pivoting outward due to weak domestic demand and rising export profitability,” said Kpler analysts.

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Looking ahead

Markets now await the U.S. Federal Reserve’s policy meeting (July 29–30), with traders watching closely for dovish signals that could support risk assets and commodities.

“The Fed is expected to hold rates steady, but cooling inflation may nudge it toward an easing bias,” said Priyanka Sachdeva of Phillip Nova.