Oil Prices Surge Following New US Sanctions on Russian Energy
Oil prices have surged, reaching a three-month peak, following the United States’ implementation of additional sanctions targeting Russian oil exports.
The Biden administration’s sanctions, enacted on Friday, focus on major Russian oil companies such as Gazprom Neft and Surgutneftegas. Additionally, 183 tankers that transport oil to India and China were blacklisted, compelling significant oil consumers worldwide to seek alternative supplies from regions like the Middle East, Africa, and the Americas.
Brent crude, which serves as the global benchmark, increased by up to 2.3 percent, equating to $1.83 per barrel, bringing prices to $81.60. Meanwhile, West Texas Intermediate saw a rise of 1.79 percent or $1.37, trading at $77.90.
The newly imposed sanctions, aligned with similar actions from the UK, come just days before Trump assumes office. UK Foreign Secretary David Lammy noted that the intention behind these measures is to disrupt “the lifeblood of Putin’s war economy.”
Lammy further stated, “We cannot allow oil revenues to jeopardize the lives of Ukrainians, nor will we permit Russia to continue fattening its coffers while posing a threat to our collective security.”
The US also took action against two Russia-based maritime insurance companies, Ingosstrakh Insurance and AlfaStrakhovanie Group, both of which have encountered similar sanctions from the UK.
A statement from the White House highlighted that the robustness of the oil markets influenced the decision to impose comprehensive sanctions.
Daleep Singh, the US deputy national security adviser for international economics, commented that the current favorable conditions in the oil market reduce the risk of sanctions inadvertently benefitting Russia by elevating prices. He emphasized the need to avoid boosting Putin’s export revenues while simultaneously raising costs for consumers in the US and around the globe.
As a result of this upward trend, Brent crude’s March contract has seen a total increase of 9 percent, or $6.98, since the beginning of the year. Last April, oil prices peaked above $90 per barrel amid concerns sparked by the ongoing war in Ukraine and potential escalation of conflicts in the Middle East.
However, these fears were later overshadowed by slow global economic growth and a decelerating Chinese economy, primarily affected by challenges within the country’s property sector.
On Monday, shares of major oil companies BP and Shell, both listed on the FTSE 100, experienced gains, with BP rising by 1.43 percent to close at 431 pence and Shell increasing by 1.45 percent to £26.63.
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