Oil Extends Rally on Signs Sanctions Are Hurting Russian Flows
Oil extended gains on signs US sanctions are hampering Russian crude supplies.
West Texas Intermediate rose 1.4% to settle above $73 a barrel, building on Monday’s 1.9% advance, which was the biggest in almost four weeks. Several million barrels from Russian platforms in the Pacific are stranded after the shuttle tankers that hauled them to China were blacklisted.
Russia’s crude output last month slipped further below the nation’s OPEC+ quota, people familiar with the data said. Chinese refiners are being offered Russian crude at bigger discounts as the sanctions take hold, while premiums for Middle Eastern crude surge.
“The effects of the tightened sanctions against Russia and Iran on the oil supply appear to be underestimated,” Commerzbank analysts including Carsten Fritsch wrote in a note. That, coupled with a recent sharp reduction in bullish wagers, creates “upside potential for oil prices in the coming weeks.”
Oil has had a rocky start to the year, initially rising on higher heating demand due to a cold Northern Hemisphere winter and the US measures against Russia’s crude industry. Those gains were sapped by concerns that US President Donald Trump’s expanding tariffs will hurt major economies and reduce global petroleum demand, before a renewed focus on the sanctions fueled this week’s rally.
Trump has also said Israel should call off its ceasefire agreement with Hamas if hostages aren’t returned this weekend, risking another escalation of hostilities. Both sides have accused each other of violating the terms of the deal.
Still, projections for a global oil glut continue to weigh on the long-term outlook. The Energy Information Administration on Tuesday forecast bigger oil surpluses than it previously projected for this year and in 2026, driven by continued growth in non-OPEC production and expectations that sanctions will have a limited impact on Russian output.
WTI for March delivery rose 1.4% to settle at $73.32 a barrel in New York.
Brent for April settlement gained 1.5% to settle at $77.00 a barrel.
Source : Bloomberg
