New York- Oil prices rallied nearly 3 percent to their highest in three months on Friday as traders braced for supply disruptions from the broadest US sanctions package targeting Russian oil and gas revenue.
President Joe Biden’s administration imposed fresh sanctions targeting Russian oil producers, tankers, intermediaries, traders and ports, aiming to hit every stage of Moscow’s oil production and distribution chains.
Brent crude futures settled at $79.76 a barrel, up $2.84, or 3.7 percent, after crossing $80 a barrel for the first time since Oct.7.
US West Texas Intermediate crude futures rose $2.65, or 3.6 percent, to settle at $76.57 per barrel, also a three-month high.
At their session high, both contracts were up more than 4 percent after traders in Europe and Asia circulated an unverified document detailing the sanctions.
Sources in Russian oil trade and Indian refining told Reuters the sanctions will severely disrupt Russian oil exports to its major buyers India and China.
“India and China (are) scrambling right now to find alternatives,” Anas Alhajji, managing partner at Energy Outlook Advisors, said in a video posted to social network X.
The sanctions will cut Russian oil export volumes and make them more expensive, UBS analyst Giovanni Staunovo said.
Their timing, just a few days before President-elect Donald Trump’s inauguration, makes it likely that Trump will keep the sanctions in place and use them as a negotiating tool for a Ukraine peace treaty, Staunovo added.