Crude oil prices experienced a notable rally overnight, fuelled by a resurgence of geopolitical risks and increasingly tight supply signals. According to ANZ, the gains were primarily driven by renewed concerns surrounding Russian oil supply. These concerns arose after reports indicated that Donald Trump had given Russian President Vladimir Putin a deadline to strike a truce with Ukraine. The US president had earlier threatened 100 per cent secondary tariffs on Moscow in a bid to force a peace deal, raising fears that Russian oil flows could face further disruption.
Market jitters were further intensified by a new round of European Union sanctions. These sanctions included a lower price cap on Russian crude oil and restrictions on refined products made with Russian oil in third countries, adding further pressure to the global oil supply. The EU also announced it had agreed to purchase $US750 billion worth of American energy products under a sweeping trade agreement.
Analysts remain somewhat sceptical about the EU’s capacity to absorb such significant volumes of US oil and gas. Nevertheless, the move is broadly expected to contribute to a tightening of the market. Meanwhile, OPEC’s Joint Ministerial Monitoring Committee concluded its latest meeting without recommending any changes to existing output policy. Instead, the committee urged member nations to maintain compliance with their current quotas.
The market anticipates that OPEC will likely consider raising its production targets when it convenes on August 3 to review supply arrangements for September. Brent Crude Oil last traded 0.6 per cent higher at $US68.86 a barrel.
