Crude oil prices began trade this week with a modest gain after on Friday the European Union approved the 18th package of sanctions against Russia, targeting once again its energy industry with a lower price cap and specific sanctions against energy companies.
Brent crude was trading at $69.35 per barrel at the time of writing, and West Texas Intermediate was trading at $67.52 per barrel. Russia’s flagship Urals, which the EU has now capped at 15% below its market price in an attempt to make the whole idea of a price cap work after indirectly admitting the current price cap, at $60 per barrel, did not do a whole lot to stem the flow of Russian crude into international markets.
ING commodity analysts said the 18th sanction package was unlikely to affect sentiment among oil traders given the ineffectiveness of previous packages. They also noted that the EU may agree to lower the price cap but without the U.S., the original $60 price cap cannot be changed.
Moreover, the analysts wrote in a note earlier today, “The EU has also sanctioned another 105 vessels, leaving a total of 444 vessels in Russia’s shadow fleet affected. The lack of reaction shows that the market is not convinced by the effectiveness of these sanctions.”
Rosneft, however, slammed the latest round of sanctions because they also involve an Indian refiner. “The Nayara Energy refinery is a strategically important asset for the Indian energy industry, providing a stable supply of petroleum products to the country’s domestic market. The imposition of sanctions against the refinery directly threatens India’s energy security and will have a negative impact on its economy,” Russia’s largest oil company said on Sunday.
Elsewhere, worry continues about the potential impact of U.S. tariffs on European Union countries and their demand for oil. That worry will probably remain in place until the end of the month, which should bring either a trade deal or the entry into effect of tariffs from August 1.
Source: By Irina Slav from Oilprice.com