Oil prices held steady on Tuesday after the U.S. and China agreed to extend a pause on higher tariffs, easing fears of a trade war escalation that could hurt global oil demand. Brent crude dipped slightly to $66.61 a barrel, while U.S. West Texas Intermediate (WTI) edged down 0.2% to $63.86.
The U.S. delayed new tariffs on Chinese goods until November 10, raising hopes for a trade deal between the world’s two largest economies. A prolonged trade conflict could slow economic growth, weakening fuel demand and dragging oil prices lower.
Market sentiment was also supported by expectations of a U.S. Federal Reserve rate cut in September, following signs of a softening labor market. Lower interest rates typically stimulate economic activity, boosting oil consumption.
However, geopolitical risks loom as U.S. President Donald Trump prepares to meet Russian President Vladimir Putin on Friday to discuss ending the Ukraine war. The U.S. has threatened harsher sanctions on buyers of Russian oil, including China and India, if no peace deal is reached.
Analysts suggest a ceasefire could delay secondary sanctions, while failure could lead to stricter measures, potentially disrupting global oil flows. Investors are also watching U.S. inflation data for clues on future Fed policy.