Oil Prices Rise on EU Sanctions and Supply Disruptions in Iraq
Oil prices edged higher on Friday after the European Union announced a fresh round of sanctions against Russia, while ongoing supply concerns—spurred by drone strikes on northern Iraqi oilfields—and tight market fundamentals added further support.
As of 06:52 GMT, Brent crude futures gained 62 cents (0.89%) to trade at $70.14 per barrel, while U.S. West Texas Intermediate (WTI) crude rose 64 cents (0.95%) to $68.18 per barrel.
The EU agreed to its 18th sanctions package targeting Russia over the war in Ukraine, with new restrictions focusing on the country’s oil and energy sectors. Among the measures, the G7’s price cap on Russian crude will be reduced to $47.6 per barrel, according to Reuters.
Oil prices also found support from four consecutive days of drone attacks on oil infrastructure in Iraqi Kurdistan, which led to a halving of regional output and drove both Brent and WTI up by $1 on Thursday.
Seasonal travel demand has further tightened supply conditions. According to JPMorgan, global oil demand averaged 105.2 million barrels per day (bpd) in early July—up 600,000 bpd from the same period last year and consistent with current forecasts.
“Crude prices have largely held steady this week,” said LSEG analyst Anh Pham, noting that OPEC+ production increases have been offset by robust U.S. summer demand.
U.S. inventory data also pointed to tightening supply. Government figures released Wednesday showed a larger-than-expected drawdown of 3.9 million barrels, compared to forecasts of just 552,000 barrels.
In Asia, demand has strengthened as refineries return from maintenance during the seasonal consumption peak.
Analysts at ING suggested that market conditions are expected to stay tight through Q3, though supplies are likely to improve in the final quarter of the year.
However, some headwinds remain. Uncertainty over U.S. tariff policies, unlikely to be clarified until after August 1, is keeping investors cautious. In addition, plans by major producers to unwind output cuts may increase supply just as summer demand begins to taper.
For the week, Brent and WTI were on track for modest declines of 0.30% and 0.42%, respectively.
Crude production in Iraqi Kurdistan has been slashed from 280,000 bpd to roughly 140,000–150,000 bpd, according to energy officials. While the attacks are believed to have been carried out by Iran-aligned militias, no group has officially claimed responsibility.
Despite the disruption, Iraq’s federal government announced Thursday that oil exports from Kurdistan to Turkey—halted for two years—will soon resume via pipeline.
