EU’s New Russia Sanctions: The European Union has approved its 18th sanctions package against Russia over the war in Ukraine, which includes measures targeting India’s Nayara Energy for exporting oil products refined from Russian crude. Despite the new sanctions, analysts believe they are unlikely to significantly impact global oil markets, as Russia has proven adept at bypassing such restrictions. Kremlin spokesperson Dmitry Peskov echoed this sentiment, stating that Russia has developed a degree of immunity to Western sanctions. The package follows recent threats from U.S. President Donald Trump to sanction buyers of Russian exports unless a peace deal is reached within 50days. ING, a global financial institution, analysts noted that the most impactful element may be the EU’s ban on importing refined oil products made from Russian crude in third countries, though enforcement could be challenging.
China’s Refined Oil Imports: China’s fuel oil imports rebounded in June, rising 7% from May to about 1.4 million metric tons, though still 6% lower than a year earlier. This recovery followed increased tax rebates for some independent refineries in Shandong province. Despite the monthly gain, total imports for the first half of 2025 dropped nearly 20% year-on-year. Meanwhile, exports of low-sulphur marine fuels surged 88% from May to 2.32 million tons, up 46% from June 2024. The export growth reflects strong demand for bunker fuel along China’s coast.
Baker Hughes Rig Report: U.S. energy firms added seven oil and gas rigs this past week, marking the first increase in 12 weeks and the largest gain since December, bringing the total to 544. Despite this rise, the count remains 7% lower than a year ago. Oil rigs dropped by two to 422, their lowest since September 2021, while gas rigs jumped by nine to 117, the highest since March 2024. Texas and the Permian Basin both saw rig declines, but the Haynesville shale region added three rigs. The overall rig count has declined in recent years as companies focus more on shareholder returns and debt reduction amid lower energy prices.
Market Overview: The energy complex is mixed and seeing little change to start the morning and the week, as markets reacted mildly to new EU sanctions on Russian oil. Analysts suggest the sanctions, which also target India's Nayara Energy, are unlikely to disrupt global supply significantly due to Russia’s ability to bypass restrictions. The EU’s import ban on refined oil products from Russian crude processed in third countries may have more impact, though enforcement could be challenging. Meanwhile, U.S. tariffs on EU imports set to begin August 1 are adding to demand concerns. Iran is also set to resume nuclear talks with European nations, potentially influencing future oil market dynamics.
The above shows Heating Oil Nymex values from July 2024 through today, heating oil prices have shown notable fluctuations, with several peaks and troughs throughout the period. The current price is around $2.46 per gallon, showing a slight daily gain of around 0.50%. The 40-day (purple), 100-day (green) and the 200-day (blue) moving averages all represent levels of support at this time. Also, not shown in the chart, the Relative Strength Index (RSI) is at 59.29 representing that the commodity is nearing an overbought level.
Oil prices closed slightly lower on Monday, with WTI crude settling at $67.20, as new EU sanctions on Russian oil were seen as having limited impact on global supply. Analysts noted that Russia has developed resilience to sanctions, and markets expect oil to continue reaching buyers through alternative channels. However, concerns over tighter diesel supplies kept heating oil futures supported, while on the other hand diesel crack spreads continue to rise. The EU's ban on refined products made from Russian oil in third countries could have more effect, though enforcement may be difficult. Meanwhile, U.S. oil rig counts fell to their lowest since September 2021, and Iran is set to resume nuclear talks amid renewed sanction threats.
