Crude oil prices climbed during the European session on Monday (July 28), thanks to the US-EU trade agreement, which eliminated the threat of a 30% tariff on European goods and shifted the focus to energy cooperation. The agreement includes the EU's commitment to purchase $750 billion of US energy, a signal that not only consolidates transatlantic relations but also boosts overall market sentiment. In addition, market expectations of an extension of the US-China tariff truce (negotiations are scheduled to be held in Stockholm) further exacerbated the optimistic atmosphere.



Analysts said the deal removed a layer of trade risk and brought the market's focus back to oil fundamentals. However, Tamas Varga of PVM noted that persistent bearish factors such as a stronger dollar and lower crude oil imports from India kept a lid on the gains.

OPEC+ supply strategy moves forward as planned

On the supply side, OPEC+ is expected to maintain its production plan at its meeting on Monday. Reuters reported that the group may increase production by an additional 548,000 barrels per day in September as part of its plan to gradually withdraw its voluntary production cut of 2.2 million barrels per day by the end of the quarter. ING predicts that unless there is an unexpected market shock, the group will proceed as planned.

Meanwhile, Venezuelan state oil company PDVSA is preparing to restart swap-based crude exports if the U.S. restores partner authorizations. Although initial export volumes may be limited, the re-entry of Venezuelan crude could pose a potential downside risk to the market later this year.

Market supply is tight, Saudi Arabia plans to raise the official selling price of crude oil again

Asian refiners expect Saudi Arabia to raise its official selling prices (OSPs) for the second consecutive month in September. The Arab Light crude benchmark price is expected to rise by $1.05 per barrel from the Oman/Dubai average to a five-month high of $3.25 per barrel. Strong demand in the Asian market and limited export volumes in the summer continue to support oil prices.

Chinese refineries are currently running at higher rates to meet rising domestic fuel demand and replenish low inventories. These trends have particularly reinforced bullish sentiment in the Middle East crude spot market.

Crude oil outlook: Trade clarity and supply constraints drive bullish market trend


(WTI crude oil daily chart source: Yihuitong)

The recent consolidation of oil prices around the $65-66 range shows that the market is looking for direction, but the current support level is solid. If the price falls below $64, it may drop to $62.69.

Short-term oil market sentiment remains bullish as geopolitical trade tensions ease and OPEC+ remains disciplined on supply.

A rise in Saudi Arabia's official selling prices, strong demand in Asia and technical support all provide reasons for oil prices to rise - but gains may be limited if a key resistance level of $68.34 is not broken.