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West Texas Intermediate rose above $80 a barrel after climbing more than 3% on Wednesday, to hit the highest since July. Brent closed near $82. US sanctions last week against Russia’s energy industry have rattled the market, with the International Energy Agency warning they could “significantly disrupt” the nation’s supply and distribution chains.
Already, long-standing buyers of Russian crudes are looking elsewhere, while the amount of oil stranded off the Chinese coast has swelled as traders, refiners and shippers try and avoid being caught up in the curbs. India is rushing to pay for its existing Russian oil purchases.
Crude has rallied by around 12% since the start of the year, helped by a cold Northern Hemisphere winter fanning demand, the steady fall in US inventories, and multiple risks to shipments. In addition to the curbs against Russia, traders are concerned the incoming Trump administration may both tighten sanctions against Iran and impose trade levies that disrupt oil exports and risk drawing retaliatory measures.
In its monthly market snapshot on Wednesday, the IEA said the 160 tankers sanctioned by the US last week had shipped more than 1.6 million barrels a day of Russian oil in 2024, about 22% of the country’s seaborne exports. It also noted that previous rounds of curbs had been “highly effective, reducing the activity of designated tankers by 90%.”
In the US, oil inventories dropped for an eighth week to hit the lowest since April 2022, according to official data released on Wednesday. They are at a six-year seasonal low.
