Oil prices rose on Tuesday as the United States and China extended a pause on higher tariffs, easing concerns an escalation of their trade war would disrupt their economies and crimp fuel demand in the world's two largest oil consumers.

Brent crude futures gained 14 cents, or 0.2%, to $66.77 a barrel by 0643 GMT, while U.S. West Texas Intermediate crude futures rose 8 cents, or 0.1%, to $64.04.

U.S. President Donald Trump extended a tariff truce with China to November 10, staving off triple-digit duties on Chinese goods as U.S. retailers prepared for the critical end-of-year holiday season.

This raised hopes that an agreement could be attained between the world's two largest economies and avert a virtual trade embargo between them. Tariffs risk slowing global growth, which could sap fuel demand and drag oil prices lower.

Oil's gains have also been supported by fresh signs of softness in the U.S. labour market, which have boosted expectations for a Federal Reserve rate cut in September, said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova.

Also on the radar is U.S. inflation data later in the day, that could shape the Fed's rate path. Interest rate cuts typically boost economic activity and oil demand.

Potentially weighing on the oil market, Trump and Russian President Vladimir Putin are due to meet in Alaska on Friday to discuss an end to the war in Ukraine.

"The U.S.-Russia diplomatic track on the Ukraine conflict remains a wildcard, with traders monitoring for any geopolitical surprises that could disrupt supply routes or sanction regimes," Sachdeva said.

The meeting comes as the U.S. steps up pressure on Russia, with the threat of harsher penalties on Russian oil buyers such as China and India if no peace deal is reached.

"Any peace deal between Russia and Ukraine would end the risk of disruption to Russian oil that has been hovering over the market," ANZ senior commodity strategist Daniel Hynes wrote in a note.

Trump set a deadline of last Friday for Russia to agree to peace in Ukraine or have its oil buyers face secondary sanctions, while pressing India to reduce purchases of Russian oil.

Washington also wants Beijing to stop buying Russian oil, with Trump threatening to impose secondary tariffs on China.

The risk of those sanctions being enacted has receded ahead of the August 15 Trump-Putin meeting.

Source: Investing.com