Oil Rises After Russian Port Attack but US Demand Concerns Cap Gains

Oil prices rose on Friday after a Ukrainian drone strike on Russia’s Primorsk port suspended crude loadings, but gains were limited by weak U.S. demand signals. Brent crude settled at $66.99 per barrel (+0.93%) and WTI at $62.69 (+0.51%), with earlier gains fading as markets digested a U.S. jobs revision showing 911,000 fewer jobs and August CPI up 0.4%, raising concerns about economic growth. Analysts warned that potential U.S. tariffs on India and China’s Russian oil imports could tighten supplies, but uncertainty kept sentiment cautious. The IEA forecast stronger supply growth this year from OPEC+, while OPEC maintained its bullish demand outlook. Meanwhile, India’s Adani Group banned tankers under Western sanctions from all its ports, a move that could disrupt flows of Russian oil to its largest remaining buyer.

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Ukrainian Drones Force First Shutdown at Russia’s Primorsk Oil Terminal

Ukraine carried out its first drone strike on Russia’s Primorsk oil terminal, temporarily halting loadings at the country’s largest western crude export hub, which has a capacity of 1 million bpd and also handles 300,000 bpd of diesel. The attack set fire to two Aframax tankers, Kusto and Cai Yun, both registered in the Seychelles, and damaged a pumping station, though Russian officials later claimed the fires were contained with no risk of spillage. Russia reported intercepting 221 Ukrainian drones overnight, while local governor Alexander Drozdenko confirmed at least one vessel and infrastructure were hit. The disruption drove oil prices up nearly 2%, adding to global market pressure already influenced by oversupply concerns and weak U.S. demand. This marks another escalation in Ukraine’s campaign targeting Russian energy assets, following previous strikes on Ust-Luga and Novorossiisk, with Ust-Luga still operating at only half capacity after an August attack.

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US Urges G7, EU to Target China and India Over Russian Oil Purchases

The US has called on G7 and EU allies to impose tariffs on countries like China and India that continue purchasing Russian oil, arguing that such steps are necessary to cut off revenues funding Moscow’s war in Ukraine. During a G7 finance ministers’ call chaired by Canada, officials discussed using frozen Russian assets for Ukraine’s defense and expanding sanctions and trade measures. US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer urged a “unified effort” to increase economic pressure on Russia, highlighting tariffs as a key tool. President Donald Trump has already imposed a 25% additional tariff on Indian imports, raising punitive duties to 50% and straining US–India trade talks, while holding off on new tariffs against China amid ongoing trade negotiations. Trump also voiced growing frustration with Putin, saying the West may need to escalate sanctions on banks and oil unless Russia halts the war.

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UK Targets 70 Russian-Linked Tankers in Shadow Fleet Sanctions

The UK has sanctioned 70 ships linked to Russia’s shadow tanker fleet, marking the largest such move by any country to date. The sanctions target vessels involved in transporting Russian oil, including previously sanctioned ships like the 159,400-dwt Dignity and 298,600-dwt Lauren II, both built in 2004. Many of these tankers have participated in ship-to-ship transfers, moving oil from Russian ports to Asian markets while bypassing direct export controls. The crackdown also includes companies and individuals supplying materials for Russian weapons, following Moscow’s recent attacks on Ukraine and airspace violations over Poland. UK Foreign Secretary Yvette Cooper emphasized that these measures aim to cut off critical cash flows to President Putin, increasing economic pressure to end the war.

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Japan Aligns With EU, Cuts Russian Oil Price Cap to $47.60 but Exempts Sakhalin Imports

Japan has lowered its price cap on Russian crude oil from $60 to $47.60 per barrel, mirroring the European Union’s July decision as part of expanded sanctions over the Ukraine war. The move is largely symbolic since Japan’s Russian crude imports — mostly Sakhalin Blend tied to LNG production — are exempt to protect energy security, as Sakhalin provides about 9% of Japan’s LNG imports. Between January and July, Japan purchased only 599,413 barrels (0.1% of total imports) of Russian crude, highlighting limited exposure. Officials expect no real impact on procurement due to the exemptions. Alongside the cap, Tokyo announced new asset freezes and export controls targeting Russian and foreign entities.

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VLCC Rates Surge Again as Big Tanker Market Heats Up

VLCC freight rates resumed their rally on Friday, with the Baltic Exchange’s assessment rising $13,417 to $71,863 per day, marking a 59% increase since the start of the month. Several reported fixtures surpassed $100,000 per day, including the Eliza, CosWisdom Lake, and Agios Fanourios I, reflecting strong demand for long-haul voyages from the Middle East to Asia. Analysts cite tight market conditions, favorable arbitrage economics, and India’s partial shift away from Russian oil as key drivers. Despite earlier expectations of a mid-summer slowdown, fundamentals such as rising OPEC output and sustained Middle East demand have strengthened the market. Frontline CEO Lars Barstad highlighted the bullish mood, stating, “This time it’s the VLCC’s turn,” signaling optimism among shipowners for further rate gains into the fourth quarter.

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EU Energy Chief: EU Could Quit Russian Gas Within a Year

US Energy Secretary Chris Wright said the EU could end reliance on Russian gas within 6–12 months, much sooner than Brussels’ current 2028 phase-out plan, by replacing supplies with US LNG. Wright made the remarks after meeting EU energy commissioner Dan Jorgensen, urging Europe to accelerate cuts to Russian energy revenue that funds Moscow’s war in Ukraine. The European Commission’s proposal phases out short-term contracts from next year and targets a full oil and gas ban by January 2028, though Jorgensen called the timeline “ambitious” to avoid supply shocks. Hungary and Slovakia’s opposition has slowed agreement on faster sanctions, while EU leaders, including Ursula von der Leyen, say a quicker phase-out is under discussion. Russia’s share of EU gas imports has already fallen to about 13% this year from 45% pre-2022, but the US is pressing allies to move faster.