Oil prices climb to four-month high amid U.S. sanctions on Russian energy

Oil prices extended their gains, with crude trading near its highest level in four months, following the threat of a new wave of U.S. sanctions on Russia’s energy sector, which could tighten already constrained global supplies, according to Bloomberg.

Global benchmark Brent crude rose above $81 per barrel at the opening of this week’s first session, after a nearly 4% increase in the previous session. Meanwhile, West Texas Intermediate (WTI) was trading near $78 per barrel.

On Friday, the United States imposed its most severe and ambitious sanctions to date on Russia’s oil industry, targeting two major producers and exporters, insurance firms, and more than 150 tankers.

These measures, implemented less than two weeks before President-elect Donald Trump assumes office, are expected to impact key markets in India and China, potentially forcing local refineries to seek alternative supplies. India has emerged as a vital importer of Russian crude following Russia’s war on Ukraine in 2022. Meanwhile, China remains the world’s largest oil importer.

Market disruption

Crude oil prices have surged in recent weeks, supported by colder weather, declining U.S. inventories, and speculation that the Trump administration might tighten sanctions on Iranian oil flows in the coming months.

The Biden administration’s extensive sanctions package threatens to disrupt the market further, complicating OPEC+ policy, and posing new challenges for central banks—especially if these measures contribute to inflationary pressures.

Sanctions on Russia

In one of the first assessments of the potential impact of these sanctions, Citigroup noted that up to 30% of the shadow fleet transporting Russian oil could be affected, potentially threatening up to 800,000 barrels per day, though the actual loss might be less than half that figure.

Signs have already emerged of Russian supplies coming under pressure in recent weeks, with estimates indicating that the country’s seaborne crude exports have fallen to their lowest level since August 2023.

Meanwhile, some refineries in India and China have increased their purchases from the Middle East and the Atlantic Basin, amid concerns that further restrictions on imports from Russia and Iran could limit access to supplies.