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Investing.com – Oil prices rose in Asian trade on Monday, extending last week’s rally as markets reacted to a major supply disruption after the United States impose tough sanctions on Russian oil exports.
At 20:35 ET (01:35 GMT), it jumped 1.8% to $81.22 a barrel, and expiration in March rose 1.7% to $77.06 a barrel.
On Friday, oil prices rose nearly 3% to their highest level in three months.
US sanctions on Russian oil prices increase prices
The Joe Biden administration unveiled its most comprehensive sanctions package to date on Friday, aimed at slashing taxes on Russian oil and gas, which is believed to be supporting its ongoing war in Ukraine.
The US Treasury’s latest moves are targeting major Russian oil producers, including Gazprom (MCX:) Neft and Surgutneftegas PJSC (MCX:), as well as 183 vessels involved in transporting Russian oil.
These developments are expected to significantly disrupt Russian oil exports, forcing major exporters such as China and India to seek alternative suppliers in regions such as the Middle East, Africa and the Americas.
The change is expected to raise global oil prices and increase shipping costs. Analysts suggest that the sanctions will have a significant impact on Russian oil exports, which will lead China’s private refiners to reduce their refining output.
This upward trend reflects concerns about tightening supply and the possibility of increased demand from other sources. In addition, sanctions could force Russia to buy its price below $60 a barrel to remain competitive, further influencing market dynamics.
“The new measures may give the Trump administration more leverage in future negotiations with Russia, as it decides whether, when, and under what conditions to lift the sanctions imposed by Biden,” analysts said. JP Morgan said in a recent report.
Check weather conditions as cold weather hits US, Europe
Oil prices are also supported by expectations of increased demand as the cold weather continues to affect key energy markets in the United States and Europe.
The cold weather has boosted heating needs, especially in areas that rely on oil and oil for domestic and industrial heating.
The Energy Information Administration (EIA) reported a sharp decline in distillate production last week, also highlighting increased consumption amid the ongoing cold snap.
Industry participants are watching closely for updates from major producers, including OPEC+, on possible supply changes to stabilize markets over the winter.
