Oil prices rallied nearly 3% to their highest in three months on Friday as traders braced for supply disruptions from the broadest U.S. sanctions package targeting Russian oil and gas revenue.
President Joe Biden’s administration imposed fresh sanctions targeting Russian oil producers, tankers, intermediaries, traders and ports, aiming to hit every stage of Moscow’s oil production and distribution chains.Brent crude futures settled at $79.76 a barrel, up $2.84, or 3.7%, after crossing $80 a barrel for the first time since Oct.7.
U.S. West Texas Intermediate crude futures rose $2.65, or 3.6%, to settle at $76.57 per barrel, also a three-month high.
At their session high, both contracts were up more than 4% after traders in Europe and Asia circulated an unverified document detailing the sanctions.
Sources in Russian oil trade and Indian refining told Reuters the sanctions will severely disrupt Russian oil exports to its major buyers India and China.
U.S. ultra-low sulfur diesel futures , previously called the heating oil contract, rose 5.1% to settle at $105.07 per barrel, the highest since July.
The sanctions will cut Russian oil export volumes and make them more expensive.
Crude oil futures rose boosted by expectations of increased demand. Prolonged colder temperatures in the Northern Hemisphere are expected to increase heating fuel consumption. A report showing a seventh consecutive weekly decline in US crude stockpiles suggests strong demand. Furthermore, Russia’s seaborne oil exports have dropped to their lowest level since August 2023, raising supply concerns. However, gains were hampered by signs of weak demand in China, where inflation is approaching zero, and a stronger US dollar, making oil less appealing to international buyers.
“We expect crude oil prices to remain volatile in today’s session. Crude oil is having support at $73.05-72.50 and resistance is at $74.20-74.90 today’s session. In INR crude oil has support at ₹6,320-6,250 while resistance at ₹6,480-6,540,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
This copy is being updated
