Crude oil prices rose strongly in Asian trading to three-month highs in the wake of the United States’ decision to impose trade sanctions against Russia.
By 2:30 am GMT (1:30 pm AEDT) Brent crude futures were up US$1.24, or 1.55%, to US$81.00 per barrel, while West Texas Intermediate (WTI) added $1.30 (1.70%) to $77.87 per barrel.
This put them at or near the highest levels since October 2024 and continued a rally that started in December.
On Friday, United States President Joe Biden announced that his administration was introducing its most comprehensive sanctions ever on Russia to cut the oil and gas revenues funding its war against Ukraine.
Biden said the U.S. would impose new export restrictions on almost 100 entities for providing “backdoor support for Russia’s war machine”.
The targets include major Russian oil producers including Gazprom, Neft and Surgutneftegas PJSC and 183 vessels used to transport Russian oil.
“We are taking action to further reduce Russia’s energy revenues,” Biden said in a statement.
Analysts said the sanctions were expected to lift global oil prices and increase shipping costs as Russian oil exports were significant hampered.
Other factors supporting the price were falls in inventories at the Cushing, Oklahoma, storage hub to their lowest levels since 2014 and cold weather which has lifted use of heating and demand for winter fuels like oil and gas.
Goldman Sachs said it had not changed its ‘base case’ for Russia production and oil prices because Russian could incentivise continued shipping by discounting, the incoming US administration would want to lower US energy prices, and higher Russian refinery output and refined products exports could ease oil export constraints.