Crude oil prices exceeded $80 per barrel in trading on Friday, driven by the US tightening sanctions on Russia in an attempt to disrupt its oil flows. This move is part of American efforts to punish Moscow for its ongoing war against Ukraine.
Consecutive Weekly Gains:
Oil prices are set to achieve gains for the third consecutive week, with traders focusing on potential supply disruptions due to new sanctions. Brent crude futures rose by up to 5%, reaching their highest levels since early October, while West Texas Intermediate (WTI) crude surpassed $75.
Details of the Sanctions:
The comprehensive sanctions target two companies handling over a quarter of Russia’s seaborne oil exports, along with critical insurance companies and a large fleet of tankers. Targeting a significant number of tankers threatens to severely restrict Russia’s access to ships.
Market Impact:
Dennis Kessler, Senior Vice President of Trading at Korea Securities Bank, stated: “In a bullish market environment, no one wants to sell here.” He added that new sanctions on Iranian oil could also support crude prices, especially with declining US oil inventories.
US Statements:
The US State Department announced the imposition of “the toughest” sanctions on Russia’s oil and gas sectors, noting that these sanctions “will cost Russia billions of dollars monthly.” The sanctions included 8 individuals and entities linked to oil and gas production and export, aiming to deprive Russia of energy resources and undermine its ability to fund the war.
Russian Shadow Fleet:
Reuters reported that the US imposed sanctions on over 180 oil tankers, many of which are part of the so-called “Russian shadow fleet,” consisting of old and unsafe vessels used to secretly transport oil and circumvent Western sanctions.
Russian Reactions:
Russian company Gazprom condemned the US measures, describing them as “unjustified and illegal.” Since February 2022, Russia has been waging a military offensive against Ukraine, demanding that Kyiv abandon its aspirations to join Western military alliances.