Biden’s new Russia sanctions causes oil rates to rise

2025-02-05 07:18:48

(MENAFN) Oil prices rose for the third consecutive day on Monday, with brent crude exceeding $81 per barrel, reaching a four-month high. This increase follows market expectations that recent US sanctions targeting Russian oil exports could disrupt supplies to key buyers like China and India.

Brent crude futures climbed nearly 1.5% to $80.6, while US West Texas Intermediate (WTI) crude surged by more than 1.5% to $77.7, also hitting a four-month peak. Both benchmarks have risen by over 6% since January 8.

The US announced a new round of sanctions on Russia last Friday, coordinated with the UK. The sanctions target major Russian oil producers Gazprom Neft and Surgutneftegaz, as well as 183 vessels involved in transporting Russian crude oil. These measures could significantly reduce Russian oil exports, forcing China and India to seek alternative sources from regions like the Middle East, Africa, and the Americas, leading to higher global oil prices and shipping costs.

Goldman Sachs believes that the sanctions could push Brent prices even higher, beyond the current $70-85 per barrel range. The sanctioned vessels carried about 1.7 million barrels per day of oil in 2024, representing a quarter of Russia's oil exports, primarily crude.

Analysts have pointed out the logistical challenges the sanctions create, particularly for the flow of crude to India and China, as Russia has increasingly relied on tankers to deliver oil to Asia since Western sanctions on seaborne oil in 2022. Some of these vessels also transported oil from Iran, another sanctioned nation.

Onyx Capital Group analysts warned that the sanctions could have a significant impact on India, which has become a major importer of Russian crude. President Biden has acknowledged that the sanctions might affect US consumers by driving up domestic gas prices.

In response, Russian Foreign Ministry spokesperson Maria Zakharova criticized Biden, claiming that his legacy will be marked by a "mess" rather than a positive historical impact.

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