EU’s Sanctions: The European Union's latest sanctions package against Russia aims to further restrict Moscow's oil revenue but is unlikely to significantly impact its war efforts. The new measures include lowering the price cap on Russian crude to $47.60 per barrel and introducing a mechanism to keep it 15% below average Russian prices. A key addition is a ban on importing refined oil products made from Russian crude, targeting a loophole that allowed countries like India, China, and Turkey to profit by refining and re-exporting Russian oil. This ban, expected to take effect next year, could hurt India the most, as it supplies a significant portion of Europe’s diesel and jet fuel. Gulf countries like Saudi Arabia and the UAE, which are net crude exporters with large refining capacities, are likely to benefit by filling the supply gap left by Indian refiners.

Gas Prices: The average U.S. gasoline price may drop below $3 per gallon this summer for the first time in over four years, driven by weak demand due to extreme weather and increased fuel imports. Prices have already declined 8.3% over the past year, helped by falling crude oil prices and a slowdown in summer driving. Despite summer typically being a peak season for fuel consumption, demand has dipped slightly, influenced by heatwaves, more fuel-efficient vehicles, and remote work trends. Imports from Canada and Europe have surged, boosting inventories and further pressuring prices. Analysts expect continued downward momentum, especially with OPEC increasing crude production in August.

India Refining: Indian private refiners like Reliance Industries and Nayara Energy, which have benefited from discounted Russian crude, are facing new challenges due to the European Union’s latest sanctions. These sanctions ban imports of refined petroleum products made from Russian oil, even if processed in third countries, and directly target Nayara Energy. As a result, Indian refiners will need to rely more on traders to reroute exports, possibly using swaps or floating storage to bypass restrictions, especially for diesel and jet fuel. While this shift may benefit traders by increasing trade flows, it could raise costs for producers and European consumers. Indian state refiners are expected to be less affected, as they primarily sell domestically or to Asian markets through tenders.

Market Overview: Oil prices declined for a third straight session due to growing concerns that a potential trade war between the U.S. and the European Union could slow economic growth and reduce fuel demand. West Texas Intermediate (WTI) is seeing moderate price drops, with the more active September WTI contract also falling. The Trump administration’s August 1 deadline for trade deals and threats of steep tariffs have intensified tensions, prompting the EU to consider countermeasures. While a weaker U.S. dollar has helped limit losses, strong distillate margins supported by low inventories have provided some price stability. Analysts also noted that U.S. crude inventories likely declined slightly, which could influence future price movements.

Looking above we see heating oil futures since February of this year. Since then, we have seen futures values priced over $2.60 on the high end and under $2.00 on the low end. Current trade is around $2.45, and support is being held by the 200-, 100-, and 40-day moving average. In recent weeks we have seen aback-and-forth battle between the market bears and bulls, however the bulls are slightly winning given global supply concerns. Also to note, represented at the bottom of the chart is the Relative Strength Index (RSI), posting a value of just under 57. That is down this morning from yesterday, yet still near the top end of the range indicating that the market is still close to being considered overbought. 

Oil prices declined for a third straight session Tuesday, with WTI August futures falling $0.99 to $66.21. Mounting trade tensions between the U.S. and the EU, along with fading hopes for a U.S.-India deal, fueled economic slowdown fears and weighed heavily on sentiment. Diesel led losses across the energy complex, dropping nearly 3%, as industrial demand concerns surfaced despite previously tight global supplies. Analysts noted that tariff threats are becoming a larger market driver ahead of the August 1 deadline set by the U.S. administration. However, downside pressure may be cushioned if the U.S. delays or scales back tariff plans, while crude inventory draws could lend limited support.