Oil prices remained relatively stable on Monday after U.S. President Donald Trump decided to extend the deadline to put off punishing European automakers until July 9. The decision helped ease fears that the EU might face 50% tariffs on its exports and potentially stifle global economic growth and therefore fuel demand.
Brent futures were down 17 cents at $64.61 a barrel by 8:35 a.m. ET. U.S. crude futures also declined, settling down 18 cents at $61.35 per barrel. Both benchmarks had traded higher in the session, supported by the announcement of extended trade talks.
The delay in the tariff deadline has offered a reprieve to global markets, with European shares and the euro gaining. Volume, however, was light after the U.S. Memorial Day holiday, which tends to keep trading activity tamped down.
Market participants are also closely monitoring the upcoming OPEC+ meeting later this week. The meeting, set for June 1, is likely to yield a decision to increase oil production by 411,000 barrels a day in July. The group is expected to gradually reduce its voluntary production cuts when they are no longer necessary to support the market during periods of low demand.
However, the prospects of a supply rise from OPEC+ have prompted some caution, as this increase could counteract some of the bullish effects of postponing the tariffs. In addition, the current U.S.-Iran nuclear talks are also affecting market sentiment. Slow progress in the negotiations has dampened expectations for a quick return of Iranian crude to world markets, supporting prices somewhat.
Complicating matters on the market front, data this week showed a slowdown in U.S. drilling activity. U.S. companies reduced the number of working oil rigs by eight to 465 last week, the fewest since November 2021, a report showed. Such a fall points to a potential scarcity of future supplies and may offset the impact of stronger output by OPEC+.
