Crude oil prices rose Friday as the European Union finalized a new sanctions package targeting Russia's energy sector, including a steep cut to the Group of Seven's price cap on Russian crude. Brent futures climbed 73 cents, or 1.05%, to $70.25 per barrel, while U.S. West Texas Intermediate advanced 83 cents, or 1.23%, to $68.37.
The EU's 18th sanctions package, announced Friday, includes a revised crude price ceiling of $47.60 per barrel, down from the previous $60 threshold established by the G7 and EU in late 2022. "I welcome the agreement on our 18th sanctions package against Russia. We are striking at the heart of Russia's war machine," European Commission President Ursula von der Leyen stated.
Low-sulfur gasoil futures surged nearly 15% to a 17-month high, widening their premium to Brent crude by $3.50 to reach $27.27. Analysts attributed the spike in gasoil pricing to both low inventories in northwest Europe and EU restrictions on refined fuel imports originating from Russian crude. "This shows the market fears the loss of diesel supply into Europe, as India had been a source of barrels," said Janiv Shah, vice president of oil markets at Rystad Energy.
As part of the new measures, the EU also sanctioned Rosneft's largest oil refinery in India-an unprecedented move targeting Russian downstream infrastructure abroad. EU foreign policy chief Kaja Kallas confirmed the designation, underscoring the bloc's intent to intensify pressure on Moscow's global energy footprint.
Europe's reliance on imported diesel and jet fuel has become increasingly acute, as EU and UK buyers imported around 196,000 barrels per day of refined fuel from India this year, primarily diesel, gasoil, and jet fuel, according to Kpler.
Market participants are also watching for potential escalations from Washington, after President Donald Trump threatened additional U.S. sanctions unless Russia agrees to a peace settlement within 50 days. "Ultimately, it is now a matter of waiting for possible major changes in U.S. sanctions and tariff policy," analysts at Commerzbank wrote in a note.
The United States has not formally endorsed the EU's latest measures, and enforcement limitations could blunt their immediate market impact. "We expect limited impact from the lower price cap and tanker sanctions," said BNP Paribas analyst Aldo Spanjer, citing persistent challenges in monitoring shadow fleets and rerouted cargo flows.
