Oil prices edged lower on Monday amid expectations that the latest European sanctions on Russian oil would have limited impact on supply, while ongoing US tariffs continued to raise concerns about demand.

Brent crude futures fell by 38 cents, or 0.55%, to $68.90 per barrel as of 09:25 GMT, after closing down 0.35% on Friday. US West Texas Intermediate (WTI) crude slipped by 30 cents, or 0.45%, to $67.04 per barrel, after falling 0.3% in the previous session.

On Friday, the European Union approved its eighteenth sanctions package against Russia over the war in Ukraine, which also targeted India’s Nayara Energy—a refiner and exporter of petroleum products derived from Russian crude.

Harry Tchilinguirian of Onyx Capital Group said: “The latest round of European sanctions is unlikely to shift the oil market balance significantly. That’s why we’re not seeing a strong market reaction.” He added: “The Russians have demonstrated a high capacity to circumvent these types of sanctions.”

Kremlin spokesman Dmitry Peskov said on Friday that Russia has developed a kind of "immunity" to Western sanctions.

The EU sanctions followed threats from US President Donald Trump last week to impose penalties on buyers of Russian exports unless Moscow agrees to a peace deal within 50 days.

Analysts at ING Bank noted that the only component of the package likely to have a tangible effect is the ban on importing refined petroleum products made from Russian oil in third countries, though they added that enforcement and monitoring could be difficult.

Elsewhere, Iran—another oil producer under sanctions—is preparing to hold nuclear talks with Britain, France, and Germany in Istanbul on Friday, according to a spokesperson for Iran’s foreign ministry on Monday. The announcement comes after the three European nations warned that failure to resume negotiations would lead to renewed international sanctions on Tehran.

In the United States, Baker Hughes reported on Friday that the number of active oil rigs fell by two to 422 last week, marking the lowest level since September 2021.

US tariffs on EU imports are set to take effect on August 1, though US Commerce Secretary Howard Lutnick said on Sunday he remains confident that the country can reach a trade agreement with the bloc.

Tony Sycamore, market analyst at IG, said: “Tariff-related concerns will continue to weigh on the market as the August 1 deadline approaches, though some support could come from inventory data if it shows signs of tight supply.”

He added: “It looks like the market is heading for a trading range between $64 and $70 over the coming week.”

It is worth noting that Brent crude futures have recently traded between a low of $66.34 per barrel and a high of $71.53, following a ceasefire agreement reached on June 24 that ended a 12-day war between Israel and Iran.

The British pound posted a slight gain against the dollar and euro on Monday, but remained near multi-week lows against both currencies, as investors continued to focus on Bank of England policy and the UK's deteriorating fiscal outlook.

Sterling rose by 0.3% against the dollar to reach $1.3452, slightly above its eight-week low of $1.33655 recorded last week.

UK economic data last week was generally mixed—while the labor market showed signs of further slowdown, consumer inflation unexpectedly rose to its highest level in over a year.

Despite that data, investors are still almost fully pricing in a quarter-point interest rate cut by the Bank of England at its upcoming meeting on August 7, with total expected cuts reaching 50 basis points by year-end.

Sterling also gained around 0.2% against the euro, reaching 86.575 pence per euro, after touching a 14-week low last week.

Currency strategists at Goldman Sachs wrote in a note: “We believe the rise in the UK’s fiscal risk premium is the main driver of the euro’s recent outperformance against the pound.”

The UK remains in a fragile fiscal position, which worsened earlier this month after the government faced a major rebellion within its own party against welfare reform plans, raising doubts about its ability to reduce spending.

Many economists and analysts believe the government will be forced to raise taxes by billions of pounds later this year to comply with fiscal rules, especially amid slowing economic growth.

Jane Foley, Head of FX Strategy at Rabobank, said: “Sterling’s struggle to keep up with the euro’s performance this year reflects a shift in market optimism toward Germany and the eurozone.”

Foley added: “Given the UK’s fiscal concerns, we continue to favor buying the euro against the pound on dips.”

Meanwhile, Deloitte said on Monday that its consumer confidence index fell to its lowest level since Q1 2024, reflecting growing concerns about job security and income growth.

Retail sales data is due on Friday and may offer a clearer picture of consumer sentiment, while preliminary results of the purchasing managers’ index (PMI) survey on business activity are expected Thursday.

As for the US dollar, its index (which measures performance against a basket of major currencies) fell by 0.2% to 98.2 points as of 11:32 GMT, after reaching a high of 98.5 and a low of 98.1.

Gold prices rose in the European market on Monday, continuing to move in positive territory for the second consecutive day, supported by the decline in US dollar levels in the foreign exchange market.

Investors are closely monitoring developments in US trade talks, awaiting any potential catalysts that could move the market—including further signals about US interest rate cuts in the second half of this year.

The Price

• Gold prices today: Gold rose by 0.65% to ($3,370.84), from the opening level of ($3,349.84), after recording a low of ($3,345.13).

• At Friday’s settlement, gold prices rose by 0.35%, marking the second gain in the past three days, as the upward momentum in the US dollar paused.

• Last week, gold lost about 0.2%, marking its first weekly decline in the past three weeks, due to a correction and profit-taking from a three-week high of $3,377.47 per ounce.

The US Dollar

The US Dollar Index fell by 0.3% on Monday, extending losses for the second consecutive session and moving away from a three-week high, reflecting continued weakness in the dollar against a basket of major and minor currencies.

Aside from profit-taking, the dollar is weakening following comments from several Federal Reserve officials about the potential for a rate cut in July.

Federal Reserve Governor Christopher Waller stated on Friday that he favors a rate cut at the July meeting, believing that tariffs are likely to have only a limited impact on inflation.

Waller added that the underlying data “do not indicate a healthy labor market in the private sector,” and that the Federal Reserve “should act in advance” of any potential employment slowdown.

His comments came amid near-daily criticism from US President Donald Trump of Fed Chair Jerome Powell for hesitating to cut interest rates.

US Interest Rates

• Following Waller’s comments and according to the CME Group’s FedWatch tool: the pricing of a 25 basis point US rate cut in the July meeting rose from 2% to 5%, while the probability of keeping rates unchanged fell from 98% to 95%.

• The probability of a 25 basis point rate cut in the September meeting rose from 58% to 62%, while the probability of no change declined from 42% to 38%.

• To gain further clarity on the US interest rate outlook for this year, investors are awaiting comments from Fed Chair Jerome Powell on Tuesday, along with a series of key US economic data releases.

Outlook on Gold Performance

• Tim Waterer, Chief Market Analyst at KCM Trade, said: “The dollar started the week on a soft note, giving gold a chance to make early gains as the tariff deadline approaches.”

• Waterer added: “The closer we get to the critical August 1 deadline without any new trade deals, the more likely gold will try to rally toward the $3,400 level—or even higher.”

SPDR Fund

Holdings at SPDRGold Trust—the world’s largest gold-backed exchange-traded fund—fell by about 4.87 metric tons on Friday, marking the second consecutive daily decline, bringing the total down to 943.63 metric tons, the lowest level since June 16.

The euro rose in the European market on Monday against a basket of global currencies, continuing its recovery for the second consecutive day from a three-week low against the US dollar, amid active buying from lower levels.

The European Central Bank is scheduled to meet this week, and is expected to keep interest rates unchanged after a series of cuts, with markets anticipating more clues on the eurozone rate path through the end of the year.

The Price

• Euro exchange rate today: The euro rose against the dollar by 0.2% to ($1.1652), from today’s opening price of ($1.1628), after recording a low of ($1.1615).

• The euro ended Friday’s trading up by 0.25% against the dollar, marking its second gain in the last three days as part of a recovery from a three-week low of $1.1556.

• Last week, the euro lost 0.55% against the dollar, posting a second consecutive weekly loss due to tough trade negotiations between the European Union and the United States.

The US Dollar

The US Dollar Index fell by 0.3% on Monday, extending losses for the second straight session and moving away from a three-week high, reflecting continued weakness in the dollar against a basket of major and minor currencies.

Aside from profit-taking, the dollar is weakening after comments from some Federal Reserve officials regarding the likelihood of a rate cut in July.

Federal Reserve Governor Christopher Waller said on Friday that he prefers a rate cut at the July meeting, believing that tariffs are likely to have only a limited impact on inflation.

Waller added that the underlying data “does not point to a healthy private-sector labor market,” and that the Federal Reserve “needs to get ahead” of any potential slowdown in employment.

Waller’s comments came amid near-daily criticism from US President Donald Trump toward Fed Chair Jerome Powell for hesitating to cut rates.

The European Central Bank

• The European Central Bank will meet on Wednesday and Thursday this week to assess monetary policy in light of recent economic developments in the eurozone.

• The bank is widely expected to keep eurozone interest rates unchanged at 2.15%—the lowest level since October 2022.

• Markets are awaiting further signals on whether the European Central Bank will continue easing monetary policy and cutting interest rates throughout this year.