Oil prices climbed for a third consecutive session with Brent crude surpassing $81 per barrel for the first time since August 2024. The surge follows expanded U.S. sanctions targeting Russian crude exports to key markets like China and India.

Brent crude futures rose $1.48, or 1.86%, to $81.24 a barrel as of 0113 GMT, after peaking at $81.49. Meanwhile, U.S. West Texas Intermediate (WTI) crude gained $1.53, or 2%, to $78.10, hitting its highest level since October 2024.

Impact of U.S. Sanctions The U.S. Treasury's latest sanctions, imposed last Friday, target major Russian oil producers like Gazprom Neft and Surgutneftegas, as well as 183 vessels involved in Russian crude exports. Analysts predict these measures will significantly disrupt crude flows, affecting about 1.5 million barrels per day (bpd) of seaborne Russian oil exports in 2024.

This includes 750,000 bpd destined for China and 350,000 bpd for India, according to RBC Capital analysts. The sanctions are expected to force both countries to source oil from alternative regions, including the Middle East, Africa, and the Americas, driving up shipping costs and global oil prices.

Market Outlook “The doubling of tankers sanctioned for moving Russian barrels introduces a major logistical hurdle for crude flows,” noted RBC Capital analysts. Harry Tchilinguirian of Onyx Capital Group highlighted that the sanctions will particularly impact India, as previous measures had already redirected Russian oil exports from Europe to Asia.

Broader Implications The sanctions, coupled with the ongoing shift in global crude trade dynamics, are expected to sustain upward pressure on oil prices in the first quarter of 2024. Traders anticipate a reshuffling of supply chains, with increased competition for Middle Eastern and African crude, further fueling market volatility.

As the geopolitical landscape continues to influence energy markets, the ripple effects of these sanctions will be closely watched.