The market reacts to sanctions: oil price goes up due to US restrictions against Russia
23 October 14:39
The price of oil rose after the US announced sanctions against Russia’s largest producers, jeopardizing supplies and potentially changing global trade flows.
This was reported by
The price of Brent crude oil has jumped above $65 per barrel, and its 7% recovery over the past two days has been the fastest in more than two years.
The blacklisting of Russian oil giants Rosneft and Lukoil comes amid growing concerns about oversupply as the OPEC alliance, which Russia leads with Saudi Arabia, increases production. Refinery executives in India, a key buyer of Russian oil, said the restrictions would make it impossible for these flows to continue.
Meanwhile, the European Union has increased pressure on the Kremlin by introducing a new package of sanctions targeting Russia’s energy infrastructure.
The amount of crude oil on oil tankers at sea has already risen to a record level, and the International Energy Agency expects global oil supply to exceed demand by almost 4 million barrels per day next year.
Trump has said he plans to talk to Chinese President Xi Jinping about buying Russian oil, and Indian Prime Minister Narendra Modi has already assured him that the country will reduce its purchases.
“This is definitely one of the most important measures taken by the US, but I think its impact will be muted by the widespread use of illicit financial networks,” said Rachel Zimba, an analyst at the Center for a New American Security.
“It will take time for the market to realize exactly what this means,” said Vandana Hari, founder of Vanda Insights, adding that it is likely to be “a major cause for concern for refiners in India and China.”
Previously
The sanctions target two of Russia’s largest oil companies, Rosneft and Lukoil.
