Oil steadies as mixed US economic and tariff news offset new Russia sanctions

Crude oil futures were little changed on Friday on mixed US economic and tariff news and worries about oil supplies following the European Union’s latest sanctions against Russia for its war in Ukraine.

Brent crude futures fell 24 cents, or 0.3 per cent, to settle at US$69.28 a barrel, while US West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.3 per cent, to end at US$67.34.

That put both crude benchmarks down about 2 per cent for the week.

In the United States, single-family homebuilding dropped to an 11-month low in June as high mortgage rates and economic uncertainty hampered home purchases, suggesting residential investment contracted again in the second quarter.

In another report, however, US consumer sentiment improved in July, while inflation expectations continued to decline.

Lower inflation should make it easier for the US Federal Reserve to reduce interest rates, which could cut consumers’ borrowing costs and boost economic growth and oil demand.

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Separately, US President Donald Trump is pushing for a minimum tariff of 15 per cent to 20 per cent in any deal with the European Union, the Financial Times reported on Friday, adding that the administration is now looking at a reciprocal tariff rate that exceeds 10 per cent, even if a deal is reached.

“Currently envisioned reciprocal tariffs, coupled with announced sectoral levies, could push the U.S. effective tariff rate above 25 per cent, surpassing 1930s peaks ... In coming months, the tariffs should increasingly be manifest in inflation,” analysts at US bank Citigroup’s Citi Research said in a note.

Rising inflation can raise prices for consumers and weaken economic growth and oil demand.

EU sanctions

In Europe, the EU reached an agreement on an 18th sanctions package against Russia over its war in Ukraine, which includes measures aimed at dealing further blows to Russia’s oil and energy industries.

“New sanctions on Russian oil from the US and Europe this week were met by a muted market reaction,” analysts at Capital Economics said in a note. “This is a reflection of investors doubting President Trump will follow through with his threats, and a belief that new European sanctions will be no more effective than previous attempts.”

The EU will also no longer import any petroleum products made from Russian crude, though the ban will not apply to imports from Norway, Britain, the US, Canada and Switzerland, EU diplomats said.

EU foreign policy chief Kaja Kallas also said on X that the EU has designated the largest Rosneft oil refinery in India as part of the measures.

India is the biggest importer of Russian crude while Turkey is the third-biggest, Kpler data shows.

“This shows the market fears the loss of diesel supply into Europe, as India had been a source of barrels,” said Rystad Energy’s vice-president of oil markets, Janiv Shah.

In other news, US oil major Chevron closed its US$55 billion acquisition of US energy firm Hess on Friday after winning a landmark legal battle against larger US oil major rival Exxon Mobil to gain access to the largest oil discovery in decades off Guyana. REUTERS