Oil Prices Drop Despite New Sanctions and US Threats on Russia

Crude oil prices ticked slightly downward this week, despite escalating geopolitical pressure on Russian exports. The European Union approved a fresh round of sanctions on Russian crude, while US President Donald Trump threatened steep tariffs on nations that continue to buy Russian oil unless the Kremlin agrees to a peace deal with Ukraine within 50 days of Monday July 14 when the announcement was made.

On Monday, WTI closed at US$65.95/b, down 10 cents or 0.15% from Friday. Brent crude saw a similar dip, slipping 7 cents to US$69.21/b. Mexico’s crude oil mix also declined 0.26%, falling from US$63.67 to US$63.50/b.

The EU’s latest sanctions package, announced Friday, lowers the price cap on Russian crude exports from US$60 to US$47.60/b. Starting Sept. 3, Western shipping and insurance firms will be barred from conducting transactions that exceed the new threshold. The cap will also become dynamic, keeping prices 15% below the average Russian crude rate.

Still, enforcement remains a major challenge. Russia continues to move oil through a vast “shadow fleet” and uses non-Western shipping and insurance firms to sidestep restrictions. Countries like China and India remain key buyers, often relying on opaque intermediaries to skirt compliance rules. With lax documentation requirements and limited auditing, the cap’s real-world impact has been minimal, allowing Russia to maintain oil revenues despite some discounts.

The US threat adds another layer of pressure. Trump warned of 100% tariffs on nations that import Russian crude unless Moscow agrees to a peace deal. While the measure targets countries like India and China, its implementation and global repercussions remain uncertain.