Investing.com — Oil prices jumped in Asian trade on Monday, benefiting from last week's rise as markets reacted to the possibility of major supply disruptions after the United States imposed tough sanctions on Russian oil exports.
At 20:35 EST (01:35 GMT), futures jumped 1.8% to $81.22 per barrel, and contracts expiring in March rose 1.7% to $77.06 per barrel.
On Friday, oil prices rose nearly 3% to a three-month high.
US sanctions on Russian oil raise prices
The Joe Biden administration on Friday introduced its most comprehensive sanctions package to date, aimed at cutting Russia's oil and gas revenues, which are seen as funding its ongoing conflict in Ukraine.
The US Treasury Department's latest actions target major Russian oil producers, including Gazprom (MCX:) Neft and Surgutneftegas PJSC (MCX:), 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 is expected to raise global oil prices and increase shipping costs. Analysts indicate that the sanctions will severely affect Russian oil exports, prompting independent Chinese refiners to reduce their refining production.
This upward trend reflects concerns about tightening supply and the potential for increased demand from alternative sources. Additionally, sanctions may push Russia to price its crude below $60 per barrel to remain competitive, further impacting market dynamics.
“The new measures are likely to give the Trump administration additional leverage in future negotiations with Russia, as it decides whether, when and on what terms to lift Biden-imposed sanctions,” JPMorgan analysts said in a recent note.
Demand is upbeat as cold weather sweeps the US and Europe
Oil prices are also supported by expectations of higher demand as the cold wave sweeps major energy markets in the United States and Europe.
The cold weather has intensified heating requirements, especially in areas that rely on fuel oil for domestic and industrial heating.
The Energy Information Administration (EIA) reported a notable decline in distillate inventories last week, further highlighting the rise in consumption amid the ongoing cold snap.
Industry participants are closely monitoring updates from major producers, including OPEC+, on potential supply adjustments to stabilize markets during the winter wave.
