Oil prices steady as markets doubt crude sanctions on Russia

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4 days ago

Oil (BZ=F, CL=F)
Oil prices were little changed in early European trading this Monday as traders assess the impact of new European sanctions on Russian oil supplies.
Brent crude futures (BZ=F) slipped 0.2% to trade at $69.17 per barrel, at the time of writing, while West Texas Intermediate futures (CL=F) were muted at $67.32 a barrel.
The European Union approved its 18th package of sanctions against Russia on Friday, implementing some of the toughest restrictions yet in response to the ongoing conflict in Ukraine. A key feature of the new sanctions is the introduction of a floating price cap on Russian crude oil exports, which will be set 15% below prevailing market prices.
This measure, which will take effect on 3 September after a 90-day transition period, aims to reduce Russia's energy revenues without causing significant disruptions to global oil supplies.
"It's important to point out that while the EU has lowered the price cap, the G7 cap remains unchanged. The EU would need to get the US on board to lower the cap," ING analysts noted in a report.
Read more: FTSE 100 LIVE: Markets calm as EU readies plan for no-deal trade scenario with US
In tandem with the EU's sanctions, the UK has also ramped up its efforts to diminish Russia's oil revenues by imposing a lower price cap. The UK government announced on Friday that the cap on Russian oil will be reduced from $60 per barrel to $47.60 starting 2 September. The UK's price caps on refined oil products, however, remain unaffected: $100 for high-value refined products like diesel and petrol, and $45 for low-value refined products such as fuel oil.
Despite the intensified sanctions, analysts at ING suggested that the market's muted reaction indicated scepticism about the measures' effectiveness.
"However, the part of the package likely to have the biggest market impact is the EU imposing an import ban on refined oil products processed from Russian oil in third countries," the analysts said.
"But clearly, it will be challenging to monitor crude oil inputs into refineries in these countries and, as a result, enforce the ban."
Gold (GC=F)
Gold prices climbed on Monday, buoyed by a weaker US dollar, as investors kept a close watch on US trade negotiations and awaited key catalysts, including the Federal Reserve's upcoming policy meeting.
Gold futures (GC=F) were up 0.6% to $3,377.30 per ounce, at the time of writing, while spot gold rose 0.5% to $3,367.79 per ounce.
The US dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, was down 0.2% to 98.29.
"Dollar has made a subdued start to the week, which has left the door open for gold to post gains early doors with tariff deadlines looming large," KCM Trade chief market analyst Tim Waterer said.
Waterer added that gold's momentum could continue as the US nears a crucial deadline. 'The closer we move towards the key 1 August deadline without any new trade deals emerging, the more likely gold is to start fancying another run towards the $3,400 level and perhaps beyond.'
Investors are following developments in US-China trade talks, with the 1 August deadline set by US president Donald Trump. US commerce secretary Howard Lutnick remains optimistic about reaching a deal with the EU, adding to the uncertain market dynamics.
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Reports suggest that Trump may visit China before the Asia-Pacific Economic Cooperation (APEC) summit, scheduled for 30 October 30 to 1 November, or he could meet Chinese president Xi Jinping on the sidelines of the event in South Korea.
Later this week, the European Central Bank (ECB) is expected to keep interest rates steady at 2%, following a series of rate cuts.
Meanwhile, US Federal Reserve governor Christopher Waller indicated last week that he still supports a rate cut at the Fed's policy meeting scheduled for next week. However, his colleagues remained more cautious due to the risk of persistent inflation triggered by tariffs.
Gold, typically viewed as a safe-haven asset during economic uncertainties, tends to benefit from low-interest-rate environments.
Pound (GBPUSD=X, GBPEUR=X)
The pound was higher against a weaker dollar this Monday morning, up 0.2% to $1.3442.
However, the pound is facing downward pressure due to growing expectations that the Bank of England (BoE) may cut interest rates in August. These expectations were reinforced by UK jobs data released last Thursday, which showed that the unemployment rate had risen to a four-year high of 4.7%.
Additionally, the annual rate of pay growth in the three months between March and May slowed to 5%, the lowest level since the second quarter of 2022.
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This economic backdrop, while still overshadowed by persistent inflation in the UK, contributes to capping the GBP/USD pair's potential for further gains.
In other currency moves, the pound pushed higher against the euro (GBPEUR=X), up 0.1% to trade at €1.1544 at the time of writing.
In equities, the FTSE 100 (^FTSE) rose 0.2% on Monday morning to 9,005 points. For more details, on market movements check our live coverage here.Se produjo un error al recuperar la información
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