New US sanctions against Russia push oil prices to a 4-month record

Oil prices continued to rise and reached their highest level in four months.  Brent crude rose above $81 per barrel. Bloomberg writes about it, UNN reports.

Oil rose in price amid new US sanctions against the Russian energy industry, which led to confusion among key importers in Asia over a possible reduction in production.

The price of Brent rose above $81 per barrel after rising by almost 4% over the previous week. West Texas Intermediate was near $78.

These sweeping sanctions – less than two weeks before US President-elect Donald Trump takes office – have caught the attention of India and China, and oil refiners may be forced to look for alternative sources of supply. India has become an important buyer of Russian oil since Moscow’s invasion of Ukraine in 2022, and China is the world’s largest oil importer. Futures in Shanghai jumped to the daily limit.

China and India will be forced to change oil suppliers due to sanctions against the aggressor country – Reuters13.01.25, 03:33 • 17422 views

According to traders, in China, independent refiners in Shandong held emergency meetings to find out whether they would still be able to accept oil in transit when the fines were announced. In India, refinery representatives said they were preparing for major import disruptions that could last up to six months.

In recent weeks, oil has been rising amid cold weather, declining US inventories, and speculation that Trump may tighten restrictions on Iranian supplies in the coming months. The broad package of sanctions passed by the Biden administration threatens to create new turmoil, potentially changing the market framework for OPEC+ as the alliance plans to begin easing production restrictions later this year after a series of delays.

The surge in oil prices could also be a problem for central banks, including the Federal Reserve, if it leads to firmer inflation. Investors have lowered their expectations for the pace of Fed interest rate cuts this year as the US economy has proven resilient and price pressures persist.

While it is not yet clear how the restrictions will affect actual oil flows for producers, shippers, traders and users, some early signs of disruption have been evident. Three tankers carrying more than 2 million barrels of Russian oil were stranded in eastern Chinese waters after the sanctions were imposed on them, according to ship tracking data.

Britain follows the US in announcing sanctions against the Russian oil industry10.01.25, 19:17 • 39733 views

Among the banks, Citigroup Inc. said that up to 30% of the so-called shadow fleet of Russian tankers could be affected, jeopardizing up to 800,000 barrels per day, although the actual losses could be less than half that figure. Goldman Sachs Group Inc. said it did not change its expectations for Russian supply, as oil prices could become even cheaper to stimulate purchases.

In recent weeks, there have been signs that Russian supplies are already under pressure, with crude oil exports by sea estimated to have fallen to their lowest level since August 2023. At the same time, in Asia, some refiners in India and China are increasing their purchases of oil from the Middle East and the Atlantic basin amid concerns that further restrictions on imports from Russia and Iran could limit access to supplies.

Recall

On Friday, the United States imposed the most aggressive and wide-ranging sanctions against the Russian oil industry, affecting major exporters, insurance companies, and more than 150 tankers.