Oil Climbs as EU Tightens Russian Sanctions With Lower Price Cap

The Deer Park Complex oil refinery and petrochemical plant, owned by Petroleos Mexicanos (PEMEX), in Houston, Texas, US, on Saturday, March 8, 2025. Some 40% of the crude oil processed at US refineries is imported, and Canada and Mexico, the No. 1 and No. 2 foreign suppliers of oil to the US, respectively, together deliver more than two-thirds of that oil. Photographer: Mark Felix/Bloomberg Photo by Mark Felix /Bloomberg

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(Bloomberg) — Oil rose as the European Union agreed to a lower price cap for Russian crude, and data showed the US economy holding up despite the fallout from the Washington-led trade war.

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Global benchmark Brent topped $70 a barrel, while West Texas Intermediate was above $68. EU member states agreed to the bloc’s 18th package of sanctions on Moscow over its war against Ukraine, including the lower cap, EU foreign affairs chief Kaja Kallas said in a social-media post. The limit will be set at $15 a barrel below market rates.

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Since Russia’s invasion of Ukraine in 2022, the EU has agreed to repeated waves of sanctions including the cap, which is intended to reduce Moscow’s revenues from energy sales, while also seeking to keep those flows going into the global market to avoid a price spike. Earlier this week, US President Donald Trump’s also threated to impose tighter financial penalties on Russian energy, including nations taking its oil such as India and China.

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Oil is higher so far this month, following gains in May and June. Both Morgan Stanley and Goldman Sachs Group Inc. have made the case in recent days that while global crude stockpiles have been expanding, the substantial builds have occurred in regions that don’t hold much sway in price-setting. The diesel market has also been tight, especially in Europe and the US.

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“The logic of diesel tightness propping up crude flat prices remains unchanged,” said Huang Wanzhe, an analyst at Dadi Futures Co., who added that the peak-demand season had seen a solid start. “The key question is how long this strength can last,” she said.

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In wider markets, strong US data eased concerns about the world’s largest economy, helping to underpin a risk-on mood and global equity rally. Asian stocks advanced.

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Crude futures, as well as those for gasoil, remain in backwardation in the nearer months of their curves, which means traders are having to pay more to secure prompt supplies. That pattern points to tight conditions even as producers’ cartel OPEC+ has been relaxing output curbs at a rapid clip.

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