Oil prices surged over 3% on Tuesday, marking their highest levels since June 20, as geopolitical tensions escalated and optimism grew around easing global trade conflicts. Brent crude rose $2.47, or 3.53%, to settle at $72.51 per barrel, while U.S. West Texas Intermediate (WTI) climbed $2.50, or 3.75%, to close at $69.21.
The rally followed President Donald Trump’s announcement that the U.S. would impose new sanctions and tariffs on Russia if no progress is made toward ending the war in Ukraine within 10 days. “We’ve amped it up,” said analyst Phil Flynn, pointing to growing international alignment on penalizing Russia.
Further supporting the market, Treasury Secretary Scott Bessent warned that China could face steep tariffs under secondary sanctions legislation if it continues to buy Russian oil. His comments followed two days of economic talks with Chinese officials, signaling possible de-escalation in U.S.-China trade tensions.
Meanwhile, the recently struck U.S.-EU trade deal—which includes a 15% tariff on most EU goods—has helped the two allies avoid a broader trade war, easing concerns that had weighed on global fuel demand. The pact also includes a symbolic commitment by the EU to purchase $750 billion in U.S. energy over the next three years, along with $600 billion in European investments into the U.S.
Markets are now eyeing the U.S. Federal Reserve’s policy meeting, with expectations that the central bank will hold interest rates steady. Any dovish signals, especially amid signs of cooling inflation, could further boost economic growth prospects and oil demand.