World oil prices surge on latest Russia sanctions

Global oil prices soared on Wednesday after the US announced a new sanctions package targeting the Russian oil sector. The rally has also been supported by a drawdown in US crude stockpiles.

According to market data, Brent crude futures rose by more than 2%, reaching $82.10 a barrel – the highest since August 2024. US West Texas Intermediate crude (WTI) went up by more than 3%, hovering around $80 a barrel.

Since Friday, when the administration of US President Joe Biden announced the sanctions, Brent has risen by around $5, while WTI has gained about $4, according to data from Investing.com.

Another factor was that US crude oil inventories last week collapsed to their lowest levels since 2022, according to the US Energy Information Administration. However, according to Reuters, the oil rally was limited by the ceasefire agreement between Hamas and Israel, which was seen as a sign of de-escalating tensions in the Middle East.

The new round of sanctions against Russia targeted major Russian oil companies such as Gazprom Neft and Surgutneftegas, as well as dozens of vessels involved in transporting Russian oil. A Reuters analysis published earlier this week suggested that the restrictions will affect 10% of the world’s oil tanker fleet, with many ships unable to enter major ports.

Moscow has condemned the sanctions, calling them “illegal,” with Kremlin spokesman Dmitry Peskov warning that they could destabilize global energy markets. Responding to Biden’s move, Russian Foreign Ministry spokeswoman Maria Zakharova suggested that the president’s legacy would be defined by the “mess” he leaves behind.

On Wednesday, the International Energy Agency (IEA) warned that the US sanctions against Russia could significantly disrupt oil supply chains and tighten the global commodities market.