Investing.com — Oil prices fell slightly in Asian trading on Tuesday, retreating from a four-month high due to new US sanctions on Russian oil exports and concerns about supply disruptions.
At 20:02 EDT (01:02 GMT), it was down 0.3% at $80.77 a barrel, and contracts expiring in March were down 0.3% at $77.12 a barrel.
Oil rose in the previous two sessions, ending at a four-month high the day before as the Joe Biden administration introduced its most comprehensive sanctions package to date on Friday last week, aimed at cutting Russian oil and gas revenues.
US sanctions on Russian oil could reach $90 per barrel
The US Treasury Department's latest actions target major Russian oil producers, including Gazprom (MCX:) Neft and Surgutneftegas, as well as 183 ships involved in transporting Russian oil.
These developments are expected to significantly disrupt Russian oil exports, forcing major importers such as China and India to look for alternative suppliers in regions such as the Middle East, Africa and the Americas.
This shift has raised concerns about tightening supply and the possibility of increased demand from alternative sources. Analysts believe that the sanctions may push Russia to price its crude below $60 per barrel to remain competitive, further affecting market dynamics.
“New sanctions could push Brent price up to $90 per barrel for immediate delivery,” Bernstein analysts said in a recent note.
Industry participants are closely monitoring updates from major producers, including OPEC+, on potential supply adjustments to stabilize markets during the winter wave.
Oil strongly pressures the dollar
The US dollar remained strong on Tuesday after rising to its highest levels in more than two years.
When the value of the US currency rises against other currencies, it makes oil more expensive for buyers with weaker currencies. Reduced affordability often weakens demand in non-dollarized economies, putting downward pressure on global oil prices.
Commodities such as oil often attract speculative investment during periods of dollar weakness, causing prices to rise. However, when the dollar rises, traders may shift to safer assets, such as US Treasuries, reducing speculative demand.
