SINGAPORE- Oil prices extended gains for a third session on Monday, with Brent rising above $81 a barrel to its highest in more than four months, as wider US sanctions are expected to affect Russian crude exports to top buyers China and India.
Brent crude futures climbed $1.47, or 1.84 percent, to $81.23 a barrel after hitting an intraday high of $81.49, the highest since Aug. 27.
US West Texas Intermediate crude rose $1.55, or 2.02 percent to $78.12 a barrel after touching a high of $78.39, the most since Oct. 8.
Brent and WTI have risen by more than 6 percent since Jan. 8, and both contracts surged after the US Treasury imposed wider sanctions on Russian oil on Friday. The new sanctions included producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that have shipped Russian oil, targeting the revenue Moscow has used to fund its war with Ukraine.
Russian oil exports will be hurt severely by the new sanctions, pushing China and India, the world’s top and third-largest oil importers respectively, to source more crude from the Middle East, Africa and the Americas, which will boost prices and shipping costs, traders and analysts said.
“Friday’s announcement strengthens our view that the risks to our $70-85 Brent range forecast are skewed to the upside in the short term,” Goldman Sachs analysts said in a note.
“We estimate that the vessels targeted by the new sanctions transported 1.7mb/d of oil in 2024 or 25 percent of Russia’s exports, with the vast majority being crude oil.”