Oil surpassed US$80 per barrel as the United States increased sanctions in an attempt to hinder crude oil flows from Russia.
Brent futures rose as much as 5% to their highest level since early October, while West Texas Intermediate rose to around $77. The sweeping sanctions target two companies that handle more than a quarter of Russia’s maritime oil exports, as well as vital insurers and a vast fleet of oil tankers.
Benchmark indices had already risen earlier in the session following a report that Indian refineries were preparing for the measures.
While the market had been anticipating additional sanctions against Russia, the potential extent of the restrictions was unclear, and targeting large numbers of tankers threatens to significantly limit Russia’s ability to access the vessels.
Traders had also been preparing for tougher sanctions on Iranian oil, that would restrict a market already facing a decline in US reserves. The tightest fundamental outlook, along with cold weather and lower Russian maritime exports, have fueled the recent rally.
In an increasingly bullish market, “no one wants to be short here,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.
Brent’s price differential (the price difference between its two closest contracts) widened to US$1.02 per barrel in declinea bullish pattern. A month ago, the spread was just US$0.29.
