Brent Crude Oil hit $80 a Barrel on Friday, the highest since October 2024.
This marks an increase of over 3% from the previous day.
The price of Brent had hovered around $74-$77 since it dropped from above $80 in October.
Today, oil prices broke the $80 barrier, driven by concerns over potential US sanctions on Russian oil exports. This concern is backed by a U.S. treasury document quoted in a Reuters report
US to impose harsh sanctions on Russian oil fleet
A purported U.S. Treasury documents circulating among oil traders in Europe and Asia suggest that the United States will impose some of the harshest sanctions yet on Russia’s oil industry.
- Reuters reported that the sanction targets some top Russian oil executives, two major Russian oil companies, about 180 vessels, and dozens of Russian traders.
- This is the latest set of sanctions imposed on Russia for its war in Ukraine. Experts say it would severely disrupt Russian oil exports to its major buyers – India and China.
- Russia had managed to escape the expected effect of previous U.S. sanctions on its economy by diverting its oil and gas supplies from Europe to Asia, selling to China and India at discounted prices.
China had rebuffed the U.S. government saying it doesn’t have the right to unilaterally impose sanctions on other countries.
Similar strict sanctions had been handed to Iran and it currently struggles to sell its oil through shadow fleets and cargos.
- Meanwhile, oil refineries especially in India are preparing for disruptions in supplies from Russia as a result of the latest sanctions on Russian oil fleets.
- In London trading, Brent crude futures peaked at $80.54 on Friday in anticipation of the impact of the latest sanctions.
The US Treasury reportedly plans to permit a transitional period until March 12, enabling the completion of certain energy-related transactions.
Indian oil refineries will avoid accepting Russian oil shipments transported on sanctioned tankers or vessels insured by Russian insurance companies facing sanctions, a source told Reuters.
What you should know
- Last week, Ukraine halted the flow of Russia’s natural gas through its territory to Europe, sending shockwaves across Europe and throwing countries like Hungary, Moldova, and Slovakia into an energy crisis.
- President-elect Donald Trump, who will assume office in 10 days, had pledged to end the war between Russia and Ukraine. However, it is not clear if he’d relax the sanctions on Russia.
- High global oil prices mean increased revenue for Nigeria but it also means a possible hike in retail prices.
