Oil prices surged on Monday, reaching their highest level in over three months, driven by expectations that expanded U.S. sanctions would impact Russian crude exports to China and India, the world’s top and third-largest oil importers.
Brent crude futures rose by $1.35, or 1.69%, reaching $81.11 per barrel, after briefly peaking at $81.44, the highest point since August 27.
U.S. West Texas Intermediate crude also experienced significant gains, rising $1.40, or 1.83%, to $77.97 per barrel, after reaching a high of $78.32, the highest since October 8.
This increase came after the U.S. Treasury’s imposition of sanctions on Russian oil producers Gazprom Neft and Surgutneftegas, along with 183 vessels involved in transporting Russian oil on Friday.
These measures are aimed at curbing the revenue Moscow uses to finance its war with Ukraine.
The new sanctions are set to severely impact Russian oil exports, forcing major buyers like China and India to turn to the Middle East, Africa, and the Americas for alternative supplies.
This shift is expected to push up both oil prices and shipping costs, as noted by traders and analysts.
“The last round of OFAC sanctions targeting Russian oil companies and a very large number of tankers will be consequential in particular for India,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
