Oil Dips Slightly as Markets Downplay EU Sanctions on Russian Crude

Oil prices slipped on Monday with Brent crude falling 7 cents to $69.21/barrel and WTI dropping 14 cents to $67.20, as markets expected minimal supply disruption from the EU's 18th sanctions package on Russia. Despite sanctions targeting India's Nayara Energy and banning refined Russian crude products, traders believe Russian oil will still reach global markets. Analysts flagged potential enforcement challenges and noted that refined diesel supply concerns helped limit losses, with the diesel crack spread widening and low-sulphur gasoil futures closing at a $26.31 premium to Brent—the highest since February 2024. The U.S. oil rig count fell by two to 422, the lowest since September 2021, indicating restrained domestic drilling activity. Meanwhile, geopolitical tensions continued with Iran nuclear talks resuming and U.S. tariffs on EU imports looming on August 1, potentially impacting global oil demand.

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UK Sanctions 135 Tankers to Hit Russian Oil Revenues as EU Delists MOL LNG Ships

The UK imposed sanctions on 135 tankers linked to Russia’s shadow fleet, claiming they transported $24 billion worth of cargo since early 2024. The move aims to cut off oil revenue funding President Putin’s war effort, with Foreign Secretary David Lammy vowing to use the “full might” of sanctions to pressure Moscow. In addition to the vessels, the UK also targeted Lukoil’s Dubai-based sales unit and Intershipping Services, which allegedly registers shadow fleet tankers under Gabon's flag. Meanwhile, the EU reversed course on three Mitsui OSK Lines LNG carriers — North Moon, North Light, and North Ocean — removing them from its sanctions list. These vessels were previously blacklisted in May for transporting cargoes from the unsanctioned Yamal LNG project.

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EU Sanctions Push Indian Refiners Toward Traders and Alternative Routes

The EU’s 18th sanctions package bans imports of refined products made from Russian crude processed in third countries, significantly impacting Indian private refiners like Reliance Industries and Nayara Energy. Reliance, India's top buyer of Russian oil, exported 2.83 million barrels of diesel and 1.5 million barrels of jet fuel monthly to Europe, accounting for 30% and 60% of its respective exports. Nayara, backed by Rosneft, exports over 4 million barrels of refined products per month, mainly sending jet fuel to Europe. The sanctions, to be phased in over six months, will force Indian refiners to rely more on traders and use indirect routes such as swaps with Middle Eastern cargoes or re-export via floating storage in the Middle East and West Africa. State refiners like MRPL are less affected due to local sales and Asia-focused exports. Traders are expected to benefit from more trade flows, while Europe may face higher refined fuel prices this winter.

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Europe’s Chemical Industry Battles for Survival Amid Global Competition and Aging Infrastructure

Europe’s petrochemical industry is facing existential threats, with high costs, aging infrastructure, and growing global competition—particularly from China—forcing widespread plant closures. Up to 40% of the EU’s 24.5 million metric tons of ethylene capacity is at medium to high risk of shutdown, and 50,000 jobs could be lost by 2035, as utilization rates fall below the 80% economic threshold. Compared to the EU’s reliance on older, naphtha-fed crackers, U.S. and Middle Eastern plants operate with far cheaper ethane, reducing ethylene production costs to below $400/ton and $200/ton, respectively, versus $800/ton in Europe. Companies like Eni and Shell are exiting or downsizing, while INEOS is betting on survival with a €4 billion ethane cracker in Antwerp, the first of its kind in Europe in 30 years. Though the European Commission pledges to support domestic production, experts warn that only a few dominant players will remain unless urgent intervention materializes.

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Britain’s Lindsey Oil Refinery to Shut Down After Failed Sale Attempts

The Lindsey oil refinery, one of the UK’s five remaining refineries with a capacity of 113,000 bpd, will close after no credible buyers emerged, Energy Minister Michael Shanks confirmed. The site entered insolvency last month after its owner, Prax, collapsed financially, leaving around 420 jobs at risk. Legal filings reveal Prax's parent firm has filed a claim against CEO Sanjeev Kumar Soosaipillai for breach of fiduciary duty. Shanks criticized the refinery’s owners and urged them to financially support affected workers. While fuel deliveries briefly resumed post-insolvency, the official receiver is now focused on selling Prax’s remaining assets.

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Saudi Crude Exports Hit 3-Month High in May Amid Rising Output and Direct Burn

Saudi Arabia’s crude oil exports rose to a three-month high of 6.191 million bpd in May, up slightly from 6.166 million bpd in April, according to JODI data. Crude output also increased to 9.184 million bpd from 9.005 million bpd the previous month. Domestic refinery throughput edged up to 2.721 million bpd, while direct crude burning rose significantly by 112,000 bpd to 489,000 bpd. Saudi Arabia stated it remained fully compliant with its voluntary OPEC+ production quota, supplying 9.352 million bpd of Saudi-marketed crude in June. OPEC+ previously agreed to raise production by 548,000 bpd in August and may approve another increase for September at its next meeting.

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VLCC Owners Remain Hopeful Amid Tepid Market as Rates Face Mild Pressure

Global tanker markets saw modest gains last week, with average daily earnings rising 12% to $26,696, driven by stronger performance in suezmax, LR2, and some MR routes. VLCC spot rates on Middle East to Asia routes reached $30,000 per day, up $3,000 from the previous week, as owners resisted lowering rates. However, limited cargo volumes and subdued activity are keeping downward pressure on the market, with any decline expected to be modest. Fixtures like Sinokor Maritime’s East Loyalty at $29,000/day highlight selective improvements, but brokers like Gibson describe overall VLCC sentiment as lackluster due to slow enquiry. Owners remain optimistic for a rebound, particularly as attention shifts to early August and mid-month West Africa loadings, where activity is expected to increase.