Supply Choked! Oil Prices Soar After Russian Sanctions & Iraq Explosion
World oil prices rose in trading on Friday (July 18th) after the European Union approved new sanctions against Russia and supply disruptions emerged from the Kurdistan region of Iraq. These two factors heightened market concerns about short-term oil supply shortages.
Brent crude rose $0.62, or 0.89%, to $70.14 per barrel, while US WTI rose $0.64, or 0.95%, to $68.18 per barrel. This surge occurred amid the announcement of the EU's 18th package of sanctions against Russia, which includes lowering the G7 price ceiling for Russian crude to $47.6 per barrel, according to diplomatic sources quoted by Reuters.
Furthermore, drone attacks over the past four days on oil fields in Iraqi Kurdistan have halved the region's production from around 280,000 to 140,000–150,000 barrels per day. While no one has claimed responsibility, Iraqi officials have named Iran-backed militia groups as the likely perpetrators. The Iraqi federal government stated that exports to Turkey would resume soon.
Seasonal demand is also supporting prices. JPMorgan data shows that global oil consumption averaged 105.2 million barrels per day in the first two weeks of July—up 600,000 barrels from a year ago. At the same time, US crude oil inventories fell significantly by 3.9 million barrels, well below expectations.
Market conditions remain tight even as OPEC+ slowly increases supply. However, analysts warn that a potential increase in production and uncertainty over US tariff policy heading into August could limit price gains in the coming weeks. For the week, Brent and WTI remained down 0.30% and 0.42%, respectively, reflecting a market still clouded by cautious sentiment.
Source: (ayu-newsmaker)
