Oil prices steady as traders weigh Russia sanctions, tariff risks

SINGAPORE: Oil prices showed little movement on Monday as investors balanced concerns over fresh European sanctions on Russian crude with fears that upcoming US tariffs might curb fuel demand, all while Middle East producers increase supply.

Brent crude edged down by just 1 cent to $69.27 a barrel in early trading, after losing 0.35 per cent on Friday. Meanwhile, US West Texas Intermediate (WTI) crude rose 10 cents to $67.44, following a 0.30 per cent dip in the previous session.

The European Union last week approved its 18th package of sanctions against Russia over the Ukraine conflict. The new measures also target India’s Nayara Energy, a major exporter of oil products refined from Russian crude.

Despite the sanctions, Kremlin spokesperson Dmitry Peskov said on Friday that Russia had developed “a certain immunity” to Western restrictions. Analysts at ING noted that oil markets have largely shrugged off the latest EU move, suggesting doubts about the sanctions’ potential impact.

However, the most significant change in the new sanctions package, according to ING, is an EU import ban on refined products made from Russian oil in third countries. Yet enforcing the measure could prove difficult due to the challenge of tracing the origin of crude processed in foreign refineries.

In a related development, Iran is expected to hold nuclear talks with the UK, France, and Germany in Istanbul on Friday, an Iranian Foreign Ministry spokesperson confirmed. The discussions come amid warnings from the three countries that a failure to resume negotiations could lead to renewed international sanctions on Tehran.

Back in the US, oil drilling activity continues to slow. Baker Hughes reported that the number of active oil rigs fell by two last week, dropping to 422, the lowest since September 2021.

Meanwhile, looming US tariffs on EU goods, set to begin on August 1, are adding to market uncertainty. US Commerce Secretary Howard Lutnick said on Sunday he remained hopeful of securing a trade deal with the bloc before the deadline.

IG market analyst Tony Sycamore noted that traders are watching both tariff developments and US inventory data, which could offer support if it signals tighter supply. For now, he said, oil prices appear likely to stay within the $64 to $70 range.

Since a ceasefire on June 24 ended the brief Israel-Iran conflict, Brent crude has traded between $66.34 and $71.53 per barrel.

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