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First Look - Crude rises on Russian sanctions; natural gas up as summer heat boosts demand

July 18, 2025 | Narciso Cano

Oil gains on new Russian sanctions and strong summer demand
- The WTI prompt-month contract rose $1.19 to $68.73/Bbl Friday morning
- The EU has approved a new sanctions package for Russia over its war in Ukraine (Bloomberg)
- The new sanctions include a revised oil price cap and new banking restrictions
- The current cap on Russian oil is set at $60/Bbl, it will now be set dynamically at 15% below market rates moving forward
- Restrictions will also be imposed on Russian petroleum refined in third countries
  - The move could impact the market, as Europe imports diesel from India, which in turn buys large amounts of Russian crude
  - A large oil refinery in India which is partly owned by Rosneft, Russia’s state-run oil company, has already been blacklisted
  - Florence Schmit of Rabobank said, “The sanctions package has lifted crude prices on the back of concerns about diesel supplies for Europe,” adding that “Strength in diesel has been keeping crude prices elevated for the last few weeks.”

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Natural gas is trading higher, and heading for a weekly gain
- Next week, Lower-48 gas demand is expected to reach the highest levels so far this summer, as a shift to above-average temperatures supports power demand
- Yesterday, the EIA reported a storage build of 46 Bcf, which puts the surplus to the five-year average at +178 Bcf
Gas begins flowing to Golden Pass LNG terminal
- 4.1 MMcf/d is flowing into the Golden Pass export plant, according to pipeline nominations this morning
- This is the first sign that the facility could begin startup operations soon, and this comes after developers sent letters to FERC requesting authorization to begin introducing gas
- Volumes should be relatively small as the plant starts up, potentially totaling about 0.70 Bcf/d by mid-2026, and 2.1 Bcf/d by mid-2027

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