Oil prices climbed sharply Monday following President Trump’s decision to shorten the timeline for Russia to end the conflict in Ukraine, raising concerns about potential supply disruptions. At the same time, optimism over demand was fueled by a new US-EU trade agreement.
West Texas Intermediate (CL=F) rose 1.9%, trading above $66 per barrel, while Brent crude (BZ=F), the global benchmark, approached $69 per barrel.
The recently announced trade deal between the European Union and the United States includes commitments for the EU to purchase $750 billion worth of American oil and natural gas.
Shares of liquefied natural gas producers such as Cheniere Energy (LNG), NextDecade (NEXT), and Venture Global (VG) also saw gains Monday.
The 15% tariff agreement on US imports from the EU has increased investor confidence in a possible similar deal with China, as Washington and Beijing restarted trade discussions.
President Trump’s move on Monday shortened Russia’s deadline to end the Ukraine war from 50 days to under two weeks, sparking fears of a supply shock ahead.
The president has warned of “secondary tariffs” targeting Russia and any countries continuing to purchase Russian oil.
“If enforced, oil markets cannot ignore the impact of triple-digit tariffs on Russian oil, given the significant scale of Russian exports and limited OPEC spare capacity, potentially leading to a supply shock,” JPMorgan analyst Natasha Kaneva and her team wrote earlier this month.
The EU has recently approved stricter price caps on Russian crude exports, expected to take effect in early September to curb Moscow’s revenue.
JPMorgan analysts anticipate increased oil price volatility approaching September, citing ongoing uncertainties surrounding Russia.
They also noted that supply increases from OPEC and its allies (OPEC+) are likely to be fully absorbed by the market before the fall season.
U.S. crude oil production from onshore federal lands hit a record 1.7 million barrels per day (bpd) in 2024, according to the EIA and the Department of the Interior. That’s a sixfold jump since 2008—far outpacing the broader rise in national crude output, which nearly tripled to 13.2 million bpd over the same period. The driver? An explosion of activity in New Mexico’s portion of the Permian Basin, where leasing, permitting, and drilling have surged in recent years.
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