Morning Highlights: Oil rises on EU sanctions and Kurdistan supply outages, but heads for weekly loss

Friday, July 18, 2025

Oil prices edged higher on Friday as traders weighed the impact of new European sanctions on Russian crude and fresh supply disruptions in Iraq’s Kurdistan region. But with sentiment still cautious and broader macroeconomic headwinds lingering, both benchmarks remained on track for modest weekly losses.

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Market snapshot (as of 6:30 EST):

• Brent (September): $70.19 (▲$0.67)

• WTI (August): $68.31 (▲$0.77)

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EU tightens oil sanctions on Russia

The European Union formally adopted its 18th sanctions package against Russia this week, introducing new restrictions targeting the country’s energy revenues:

• The G7 oil price cap will be lowered to $47.60 per barrel, down from the previous $60.

• Additional measures were announced to target Russia’s shadow tanker fleet, used to bypass existing restrictions.

Despite the symbolic significance, analysts say the immediate market impact may be limited.

“Neither the price cap for Russian oil nor adding shadow fleet tankers on a sanction list managed to disrupt Russian oil exports so far,” said UBS analyst Giovanni Staunovo. “The market remains skeptical of the impact of the latest sanctions.”

Attention now shifts to U.S. sanctions policy, after President Donald Trump threatened to penalize buyers of Russian crude unless a peace agreement is reached within 50 days.

“Ultimately, it is now a matter of waiting for possible major changes in U.S. sanctions and tariff policy,” Commerzbank analysts noted.

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Drone attacks slash oil output in Iraqi Kurdistan

Crude prices also found support from ongoing attacks on oil infrastructure in northern Iraq, which have forced the shutdown of nearly half of the region’s output:

• Four straight days of drone strikes targeted oilfields in the semi-autonomous Kurdish region, disrupting operations and suspending production at multiple fields.

• Kurdistan’s output was estimated at 285,000 barrels per day before the attacks. Up to 150,000–200,000 bpd are now offline.

The strikes are the most serious disruption to the region’s oil industry since April. While no group has claimed responsibility, officials suspect Iran-aligned militias.

Despite the attacks, Iraq’s federal government confirmed that Kurdistan will resume oil exports to Turkey via pipeline for the first time in over two years, offering a partial offset to the current disruption.

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Looking ahead

With supply-side risks persisting and traders watching for developments on sanctions, the market remains delicately balanced:

• U.S. foreign policy decisions—particularly around Russia and global tariffs—will be a key focus in the coming days.

• OPEC+ production ramp-up and the group’s ability to maintain cohesion will also shape the outlook for Q3.

• Traders continue to monitor Chinese fuel demand and global refinery activity amid conflicting macroeconomic signals.

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Bottom line:

Oil is holding steady near $70, underpinned by geopolitical risk and persistent supply tightness. But until there is greater clarity on demand trends and the real impact of new sanctions, price momentum may remain capped.