EU Tightens Russia Sanctions with Reduced Oil Price Cap; German PPI Meets Expectations

The European Union has officially approved its 18th package of sanctions targeting Russia, with a significant component being the reduction of the G7 crude oil price cap to around $47.60 per barrel. This move, confirmed by a Danish diplomat, aims to further restrict Russia's revenue streams and its ability to finance the ongoing conflict in Ukraine. The initial G7 price cap was set at $60 per barrel in December 2022.

In a strong reaffirmation of geopolitical alignment, EU Commissioner Kaja Kallas stated that Europe will remain resolute in its support for Ukraine, vowing to intensify pressure on Russia until the war concludes. This commitment underscores the bloc's sustained efforts to aid Ukraine's defense and reconstruction, with substantial financial, humanitarian, and military assistance already provided.

On the economic front, Germany's Producer Price Index (PPI) for June was released, aligning precisely with market expectations. The month-over-month PPI increased by 0.1%, a notable rebound from the previous month's -0.2% decline. Year-over-year, the PPI saw a decrease of 1.3%, matching estimates and slightly improving from the prior -1.2% figure.

Meanwhile, Taiwan's Vice President issued a statement condemning China's escalating military posturing, describing it as counterproductive. This comes amid increasing concerns over regional stability, with China's military activities around Taiwan intensifying.

In Asian markets, Japanese assets are bracing for potential impacts from the upcoming election, with uncertainty surrounding the outcome affecting Japanese Government Bonds (JGBs) and the yen. This market pressure is also influenced by ongoing discussions around the Bank of Japan's normalization policies.