Oil Hits Five-Month High as US Sanctions on Russia Menace Supply
Oil rallied to the highest level in five months as a fresh wave of US sanctions against Russia’s energy industry threatened to crimp supplies from one of the world’s top producers.
West Texas Intermediate advanced near $78 a barrel, after surging almost 4% on Friday. The US imposed its most aggressive and ambitious sanctions yet on Russia’s oil industry on Friday, targeting large exporters, insurance companies and more than 150 tankers.
The moves — coming just before US President-elect Donald Trump takes office — throw a spotlight on India and China, with refiners potentially being forced to seek alternative supplies. India emerged as a vital buyer of Russian crude after Moscow’s 2022 invasion of Ukraine, and China is the world’s largest oil importer.
In China, independent refiners in Shandong held emergency meetings to try and work out if they could still take delivery of crude en route when the penalties were announced, traders said. In India, refinery officials said they were bracing for major disruption, which could last up to six months, and the country plans to reject tankers that were sanctioned by the US.
Crude has had a strong start to the year, with gains spurred by colder weather, falling US stockpiles and speculation that Trump officials may tighten curbs against flows from Iran in the coming months.
The broad sanctions package from the outgoing Biden administration threatens to bring fresh disruption, potentially changing the market framework for OPEC+ as the alliance plans to start loosening output curbs later this year after a series of delays.
WTI for February delivery added 1.6% to $77.76 barrel at 10:20 a.m. in New York. Earlier, prices climbed to as high as $78.58 a barrel. Brent for March settlement was up 1.1% to $80.60 barrel.
Source : Bloomberg
