Brent oil breaks above US$70 resistance mark

Brent crude oil prices have surged past the US$70-per-barrel mark after trading in a narrow US$66-US$69 band, as stronger demand signals collide with persistent uncertainty surrounding Russian supply amid tightening Western sanctions and complex geopolitics.

The market move comes on the heels of a 10-to-12-day US-driven deadline for Russia to halt its invasion of Ukraine and enact a full ceasefire, which has provided partial relief to concerns over further supply disruptions but has also temporarily elevated prices.

Market fundamentals remain precarious.

“Global liquids balances remain fragile, with significant stock builds expected, averaging 1.1 million barrels per day (bpd) in the fourth quarter of 2025 and 1.6 million bpd in the first quarter of 2026, likely prompting policy adjustments to maintain backwardation,” according to Rystad Energy’s Vice President of Commodity Markets Analysis – Oil, Janiv Shah.

On July 18, the European Commission ratified the bloc’s 18th sanctions package, which cuts the oil price cap, bans imports of petroleum products made from Russian oil, blacklists 105 more shadow fleet tankers, and sanctions India’s Nayara refinery — where Rosneft holds a significant stake. Just days later, the US administration raised the stakes with a 100 per cent import tariff on countries buying Russian oil, effective unless a ceasefire is reached by August 9.

Additionally, a 25 per cent tariff on Indian exports to the US will take effect August 1, undermining hopes for a limited bilateral trade agreement.

Janiv Shah commented: “The accelerated deadline from the US for Russia to confirm a peace deal is unlikely to be adhered to, as US frustration shows.

“Buyers of sanctioned Russian oil have been warned of significant secondary tariffs being applied.

“Trade flows are likely to reroute once more, as the combination of the latest US deadline with the previous EU package on products made from Russian crude aim to limit Russian revenues.

Shah indicated that while shipments of Russian crude to China are expected to remain stable, exports to India face significant jeopardy, creating an opportunity for Middle Eastern OPEC+ countries to step in and supply the shortfall.

He also noted that the newly imposed 25 per cent tariff on Indian imports, effective August 1, has effectively ended prospects for a partial trade agreement.

The US sanctions have already forced adaptation within Russia’s oil sector.

Since the Biden administration imposed new restrictions on January 10, 2025, the discount at Russia’s western ports on Urals crude compared to Brent has narrowed to approximately US$10 per barrel — the tightest spread since the EU embargo and price cap were put in place.

According to Rystad Energy, Russian domestic crude inventories have declined but still offer some buffer against the shock of new sanctions.

However, the details on whether US tariffs will apply to buyers of Russian crude alone or also to those purchasing refined products remain murky.

“If we assume that the tariffs will target countries purchasing Russian crude, Russia’s exports to India are particularly at risk,” Shah said.

The stakes are high: in 2024, Indian exports to the US totalled US$81 billion, or 18 per cent of India’s global exports.

Rystad estimates Russia’s crude exports to India at about 1.6 million bpd — some 500,000bpd of which are secured via a long-term Reliance-Rosneft contract, which is likely to be exempt.

However, “US tariffs on India are likely to accelerate fewer Russian imports,” said Shah.

“We believe Russia will be able to redirect some of these flows to China.

“There could also be an increase in utilisation of domestic refineries if U.S. actions do not extend to refined products.

“Overall, we estimate that between 300,000 and 800,000 barrels per day may be at risk. Such immediate losses of volumes could be covered by OPEC+ countries,” concluded Shah.

Despite the disruptive potential of sanctions and tariffs, current market projections indicate that the loss of some Russian crude may be offset by increased output from OPEC+ and non-OPEC+ producers such as the US, Canada, Brazil, and Guyana.

Pre-sanction forecasts had already anticipated a surplus of around 1 million bpd in Q4 2025 and through 2026.

Meanwhile, Russia is contending with escalating cyber pressure, including recent attacks on the state airline Aeroflot, government services, and pharmacy networks, further complicating the path to any ceasefire or lifting of sanctions.

Janiv Shah concluded: “Signals point towards an unlikely resolution for Russia to agree to a ceasefire by August 9.”

As deadlines draw nearer, market participants will be closely watching for further price swings, trade rerouting, and policy responses across the globe.