Oil prices have climbed to their highest levels since October following reports from Reuters about new US sanctions targeting Russian crude.
President Joe Biden’s administration has introduced fresh sanctions to target every element of Moscow’s oil supply chain—from producers and tankers to intermediaries, traders, and ports. In response, Brent crude futures settled at $79.76 a barrel, up by $2.84 (3.7%), having crossed the $80 mark earlier in the session for the first time since October 7.
Meanwhile, U.S. West Texas Intermediate crude futures rose $2.65 (3.6%), closing at $76.57 per barrel—a three-month high. At one point during the session, both contracts gained more than 4% after traders in Europe and Asia circulated an unverified document outlining the new sanctions.
Sources close to Russian oil trading and Indian refining informed Reuters that these measures are likely to significantly disrupt Russian oil exports, particularly to major buyers such as India and China.
According to UBS analyst Giovanni Staunovo, the sanctions are expected to reduce Russian oil export volumes and drive up costs. He noted that their implementation just days before President-elect Donald Trump’s inauguration makes it likely that Trump will maintain the sanctions, potentially using them as a bargaining chip in negotiations for a Ukraine peace treaty.
Oil prices have also received a boost from extreme cold in both the U.S. and Europe, which has increased demand for heating oil, said Alex Hodes, an analyst at StoneX. “We have several customers in the New York Harbor who are experiencing a surge in heating oil demand,” Hodes added, noting that other heating fuels have also seen increased bids.
Meanwhile, U.S. ultra-low sulfur diesel futures—previously known as the heating oil contract—climbed 5.1% to settle at $105.07 per barrel, marking the highest level since July.
