Oil prices surged to their highest levels since August as refiners in India and China desperately sought alternative supplies following stringent new US sanctions targeting Russian oil revenues. Brent crude, the international benchmark, climbed 1.9 per cent to reach $81.29 per barrel in London trading, surpassing the previous October peak of $80.93. This uptick followed Friday’s initial 3 per cent rise after the sanctions announcement, whilst WTI, the US benchmark, increased by 2.3 per cent to $78.33.
Market analysts report Chinese and Indian refineries are actively seeking new crude sources after the US announced sanctions on major producers, including Gazprom Neft and Surgutneftegas. The US aims to restrict supply by imposing sanctions on 183 vessels within the “dark fleet” of oil tankers operating outside international regulations.
Chinese refiners have entered “panic mode” according to Amrita Sen, research director at Energy Aspects. The sanctions’ scope suggests potential restrictions on any entity trading Russian oil, expanding beyond the previous $60-per-barrel price cap designed to limit Russian profits whilst preventing market volatility.
Unusual trading patterns have emerged, with Indian purchasers exploring previously overlooked oil varieties. Industry experts note unprecedented interest in Oman crude from Indian refiners, a grade traditionally destined for Chinese markets.
The market impact extends beyond crude oil, with European gas prices rising up to 6.8 per cent following sanctions on Russian LNG facilities supplying Europe. Despite recent market stability due to abundant supply and modest demand growth, analysts suggest prices may remain elevated while the market adapts to these new restrictions.
The effectiveness of these sanctions remains uncertain, with market observers closely monitoring Russia’s ability to maintain oil exports through alternative channels. The immediate market response indicates significant near-term support for oil prices, though long-term implications depend on Russia’s adaptability to these new constraints.
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