Oil prices edged lower during Tuesday's Asian trade, remaining near their highest levels in four months as global buyers, particularly from China and India, sought alternative suppliers following the Biden administration’s stringent sanctions on Russian oil.
By 2:55 pm AEDT (3:55 am GMT) Brent crude futures slipped $0.26 or 0.3% to US$80.75 per barrel, while U.S. West Texas Intermediate (WTI) crude declined by $0.16, or 0.2%, to $78.66 per barrel. This followed approximately 2% gains in Monday's trading session, spurred by the U.S. Treasury Department’s announcement of new sanctions.
The U.S. Treasury imposed sanctions on major Russian oil firms Gazprom Neft and Surgutneftegas, as well as on 183 vessels involved in Russia’s so-called "shadow fleet" of tankers. According to a U.S. official, the measures “will collectively drain billions of dollars per month from the Kremlin’s war chest”.
In response, the Kremlin warned on Monday that the latest U.S. sanctions targeting Russia's energy sector could destabilise global markets, pledging to take all necessary measures to mitigate their effects.
Despite these pressures, U.S. President Joe Biden assured that the sanctions were designed to stabilise global oil markets and not to harm U.S. consumers.
Weaker demand from China, a key buyer, could temper the impact of tighter supply. Official data revealed that China’s crude oil imports declined in 2024 for the first time in two decades, excluding the pandemic period.
Meanwhile, six European nations called on the European Union to lower its $60-per-barrel price cap on Russian seaborne crude and refined oil products to further curb Russia’s revenue streams and its ability to fund military actions in Ukraine.