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Oil prices climbed for a third consecutive session on Monday, with Brent crude surpassing $81 a barrel to reach its highest level in over four months. The rally comes as newly imposed U.S. sanctions are expected to severely impact Russian crude exports to key buyers such as China and India.
Brent crude futures rose $1.48, or 1.86%, to $81.24 a barrel by 0113 GMT, after reaching an intraday high of $81.49—the highest since August 27. Similarly, U.S. West Texas Intermediate (WTI) crude gained $1.53, or 2%, to $78.10, after hitting $78.39, the highest level since October 8.
Both benchmarks have surged more than 6% since January 8, driven by the U.S. Treasury’s latest sanctions targeting Russian oil revenue. The sanctions, announced last Friday, include restrictions on major producers such as Gazprom Neft and Surgutneftegas, as well as 183 vessels involved in transporting Russian oil. These measures aim to curtail the financial resources Moscow uses to support its conflict in Ukraine.
Impact on Global Oil Trade
The sanctions are expected to disrupt Russian crude oil exports significantly, particularly to China and India, the world’s largest and third-largest oil importers, respectively. This shift is likely to compel these nations to increase their reliance on supplies from the Middle East, Africa, and the Americas, potentially driving up both oil prices and shipping costs.
According to estimates, the latest sanctions affect shipping activity linked to 1.5 million barrels per day (bpd) of Russian seaborne crude oil exports in 2024. This includes approximately 750,000 bpd destined for China and 350,000 bpd for India.
The tankers targeted by these measures have played a critical role in reshaping global oil trade flows. Following previous Western sanctions and the price cap imposed by the Group of Seven nations in 2022, Russian oil exports shifted from Europe to Asia. Some of the sanctioned vessels have also been used to transport oil from Iran, another country under extensive sanctions.
Broader Market Implications
With Russia’s crude export capacity facing new limitations, global markets are bracing for tighter supply. This, combined with increased demand from key importers and higher transportation costs, is expected to sustain upward pressure on oil prices in the near term.
Traders and analysts believe that the sanctions will not only challenge Russia’s ability to maintain export volumes but will also reshape the dynamics of global energy trade, with ripple effects across pricing and logistics. As geopolitical tensions and economic policies continue to intertwine, the oil market remains on high alert for further disruptions.
