Oil prices rose on Monday as traders weighed the impact of new European sanctions on Russian oil against concerns that tariffs could dampen fuel demand as Middle Eastern producers ramp up output.
As of 5:00 GMT, Brent crude futures gained 0.12 percent to $69.36 after settling 0.35 percent lower on Friday, while U.S. West Texas Intermediate crude rose 0.25 percent to $67.51 after declining 0.30 percent in the previous session.
Oil market’s response remains largely muted
Oil prices rose after the European Union on Friday approved new sanctions against Russia over the Ukraine conflict, which included measures targeting India’s Nayara Energy for exporting oil products refined from Russian crude. Commenting on the latest measures, Kremlin spokesperson Dmitry Peskov claimed that Russia has developed a degree of immunity to Western sanctions.
“Despite these measures, prices haven’t sharply fallen, partly due to ongoing geopolitical factors, shifting trade routes, and market uncertainties, including U.S.-China trade talks and supply disruptions like Canadian wildfires,” said Vijay Valecha, chief investment officer, Century Financial.
These EU measures came shortly after U.S. President Donald Trump threatened to sanction buyers of Russian exports unless Moscow agrees to a peace deal within 50 days.
However, analysts noted that the oil market’s muted response reflects skepticism about the sanctions’ potential impact. They added that the element of the package most likely to affect the market is the EU’s import ban on refined oil products made from Russian crude in third countries. However, the ban will not apply to imports from Norway, Britain, the U.S., Canada and Switzerland, EU diplomats said.
Iran nuclear talks to further cloud future supply outlook
Iran, another oil producer under sanctions, is set to hold nuclear talks in Istanbul on Friday with Britain, France, and Germany, according to a statement from its Foreign Ministry on Monday. The meeting comes after the three European nations warned that failure to resume negotiations could trigger the reinstatement of international sanctions on Tehran.
“Adding to the complexity, U.S. President Donald Trump has threatened sanctions on Russian oil buyers and new tariffs on the EU, while upcoming Iran nuclear talks further cloud the future supply outlook, creating a tug-of-war between bearish pressures from increased supply and demand worries, and bullish risks from sanctions and other uncertainties,” Valecha added.
Meanwhile, in the United States, the number of active oil rigs dropped by two last week to 422—the lowest level since September 2021, according Baker Hughes.
U.S. tariffs pressure oil market
U.S. tariffs on European Union imports are scheduled to take effect on August 1, though U.S. Commerce Secretary Howard Lutnick expressed optimism on Sunday about reaching a trade agreement with the bloc.
Concerns over U.S. tariffs are expected to keep the market under pressure as the August 1 deadline approaches. However, oil prices could find some support if upcoming inventory data indicates a tight supply. Analysts added that oil prices are likely to remain within a trading range of $64-$70 in the coming week.
