Oil prices are climbing due to new U.S. sanctions on Russian exports, affecting global markets and ETFs.
London: Oil prices are on the rise again, marking the third consecutive session of increases. Brent crude has jumped over $81 a barrel, a level we haven’t seen since late August. Meanwhile, U.S. West Texas Intermediate (WTI) crude has also crossed the $78 mark. This surge is largely due to new U.S. sanctions aimed at Russian oil exports, which are shaking up global markets.
The latest sanctions from the U.S. Treasury are a big deal. They target major Russian oil companies and a significant number of vessels involved in transporting crude. The goal here is to hit Russia’s revenue, especially in light of the ongoing conflict with Ukraine.
Market conditions are changing too. The spreads for Brent and WTI have widened, indicating a tighter supply. Analysts are saying that the increase in sanctioned tankers could really complicate the logistics of moving Russian oil.
Even with all this pressure, Russia has some options. Analysts think they might still find ways to work around the sanctions, like using non-sanctioned tankers or selling oil at lower prices to get around the price cap set by the G7. But these solutions might only be short-term fixes.
Looking ahead, Goldman Sachs is predicting that the risks for Brent prices could go up. They estimate that the sanctioned vessels represent a significant portion of Russia’s oil exports, which could shake things up in the market.
China and India, the biggest oil importers, have relied heavily on Russian crude. With these new sanctions, they’ll need to find other sources. India, in particular, could feel the pinch since it imports about 80% of its oil.
Producers from the Middle East, Africa, and the U.S. might benefit from this shift, but it’s going to come at a cost. Shipping expenses are expected to rise, which will likely push oil prices even higher.
