Oil prices have reached their highest level since October.
The United States has imposed some of the toughest sanctions against the Russian oil industry. In anticipation of the sanctions, global oil prices have risen to $80 per barrel and shares of Russian oil companies have collapsed.
This is reported by Reuters.
Brent crude futures settled at $79.76 a barrel, up $2.84, or 3.7%, and above $80 a barrel for the first time since Oct. 7.
U.S. West Texas Intermediate (WTI) futures rose $2.65, or 3.6%, to $76.57 a barrel, also a three-month high.
Both contracts had gained more than 4% at their peaks after documents outlining new sanctions were circulated in Europe and Asia.
According to sources in the Russian oil trade and Indian oil refining industry, the restrictions will significantly disrupt Russian oil supplies to major buyers India and China.
UBC analyst Giovanni Staunovo predicts a decline in Russian oil exports and a rise in prices. He also noted that the sanctions could be a tool to put pressure on Moscow in possible peace talks.
“We expect global oil demand to increase by 1.6 million barrels per day in the first quarter of 2025, driven by higher demand for heating oil, kerosene, and liquefied gas,” JPMorgan analysts said in a note.
What preceded
The United States announced new sanctions against a number of leading Russian oil and gas companies. Dozens of “shadow fleet” ships and a significant list of government officials were also hit by the new restrictions.
President Volodymyr Zelensky thanked Biden for the announced sanctions package against more than 400 entities linked to the Russian energy sector.
“These measures significantly undermine the financial foundation of the Russian war machine, because they disrupt the supply chain: key Russian manufacturers, insurers, oil and gas service providers, 184 tankers of the shadow fleet, logistics facilities and third-country companies,” he said.
The US sanctions against the Russian energy sector are expected to significantly reduce Russia's revenues that go to finance the war in Ukraine, forcing the Kremlin regime to lose billions of dollars a month.
“These sanctions target both Russian oil and LNG, and we expect that our actions will cost Russia billions of dollars a month,” White House adviser John Kirby said.
Until now, hundreds of ships and many Russian oil traders have managed to avoid the strictest US sanctions, as the Biden administration has tried find a balance between the need to tighten sanctions and prevent a global rise in oil prices.
