The world oil prices surged on Wednesday, following the announcement of a new sanctions package by the US against the Russian oil sector. The development was also supported by a decline in the US crude oil inventories.
According to market data, Brent crude futures rose by more than 2 percent and hit a high of $82.10 per barrel since August 2024. US West Texas Intermediate (WTI) crude rose by more than 3 percent, hovering around the $80 per barrel mark.
Since Friday, when the US government announced the sanctions, Brent has risen by about $5, while WTI has added around $4, according to Investing.com data.
Another factor was the decline in the US crude oil inventories to the lowest level since 2022, as reported by the US Energy Information Administration. However, the oil price increase was tempered by the ceasefire agreement between Hamas and Israel, which was seen as a sign of de-escalation 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 ships involved in the transportation of Russian oil. A Reuters analysis published earlier in the week estimated that 10 percent of the world’s tanker fleet would be affected by the restrictions, with many ships unable to enter major ports.
Moscow has condemned the sanctions, calling them “illegal.” Kremlin spokesperson Dmitri Peskow warned that they could destabilize the global energy market. The spokesperson of the Russian Foreign Ministry, Maria Sacharova, responded to Biden’s move by saying that the president’s legacy would be defined by the “chaos” he leaves behind.
On Wednesday, the International Energy Agency (IEA) warned that the US sanctions against Russia would significantly disrupt oil supply chains and constrict the global oil market.