European countries are being asked to help with Russian oil sanctions. The United States is considering stronger sanctions against Russia, depending on similar actions from Europe. Discussions between China and the US might extend the current tariff truce for another 90 days. Chinese negotiators know it’s important to reduce trade risks with the US to avoid a complete separation in the next 3.5 years.

TikTok Sale and Russian Oil Sanctions

China has asked for compensation related to the TikTok sale, including tariff and export control benefits. There is doubt about new sanctions on Russian oil, even though WTI crude has increased by 70 cents to $63.39, remaining at the low end of its range. We think the immediate risk of new tariffs between the US and China is decreasing for now. The possibility of another 90-day tariff truce suggests calmer times may be ahead. As a result, market volatility has reduced, with the VIX index falling from over 22 earlier this month to about 18.5 today. In the energy markets, the reluctance to impose new sanctions on Russian oil helps stabilize prices. After the supply shocks of 2023, West Texas Intermediate crude has stabilized in a $60-$70 range for most of 2025. Last week’s EIA report showed a surprising increase in crude inventories, making a significant price spike less likely in the near future.

Equity Index Derivatives Favorable Environment

This situation might be good for equity index derivatives, as a pause in trade tensions eases pressure on corporate earnings. The S&P 500 has already risen over 60 points in the last five trading days. There is notable interest in call options on technology and industrial sector ETFs, which are sensitive to US-China relations. China’s long-term plan to reduce reliance on the US suggests they will likely prioritize stability in the short term. This aligns with their focus on strengthening the domestic economy, as seen by the stronger-than-expected 4.5% increase in retail sales in August 2025. While tensions still exist, we can expect negotiators to take a more careful approach. Create your live VT Markets account and start trading now.

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