Latest US sanctions on Russian energy trade hit supply, pushing up spot trade prices and shipping rates
17 January 2025 - 07:55
byYuka Obayashi and Siyi Liu
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Tokyo/Singapore — Oil prices rose on Friday and headed towards a fourth consecutive weekly gain as the latest US sanctions on Russian energy trade hit supply and pushed up spot trade prices and shipping rates.
Brent crude futures rose 44c, or 0.5%, to $81.73 a barrel by 4.43am GMT, US West Texas Intermediate (WTI) crude futures were up 62c, or 0.8%, to $79.3 a barrel. Brent and WTI have gained 2.5% and 3.6% so far this week.
“Supply concerns from US sanctions on Russian oil producers and tankers, combined with expectations of a demand recovery driven by potential US interest rate cuts, are bolstering the crude market,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“The anticipated increase in kerosene demand due to cold weather in the US is another supportive factor,” he said.
The Biden administration last Friday announced widening sanctions targeting Russian oil producers and tankers, followed by more measures against Russia’s military-industrial base and sanctions-evasion efforts.
Moscow’s top customers China and India are now scouring the globe for replacement barrels, driving a surge in shipping rates.
Investors are also anxiously waiting to see any more supply disruptions as Donald Trump takes office next Monday.
“Mounting supply risks continue to provide broad support to oil prices,” ING analysts wrote in a research note, adding the incoming Trump administration was expected to take a tough stance on Iran and Venezuela, the two main suppliers of crude oil.
Better demand expectations also lent some support to the oil market with renewed hope of interest rate cuts by the US Federal Reserve after data showed easing inflation in the world’s biggest economy.
Inflation is likely to continue to ease and possibly allow the US central bank to cut interest rates sooner and faster than expected, Federal Reserve governor Christopher Waller said on Thursday.
Meanwhile, China’s economic data on Friday showed higher-than-expected economic growth for the fourth quarter and for the whole of 2024, as a flurry of stimulus measures came into effect.
However, China’s oil refinery throughput in 2024 fell for the first time in more than two decades barring the pandemic-hit year of 2022, government data showed on Friday, as plants pruned output in response to stagnant fuel demand and depressed margins.
Also weighing on the market was that Yemen’s maritime security officials said the Houthi militia is expected to announce a halt in its attacks on ships in the Red Sea, after a ceasefire deal in the war in Gaza between Israel and the militant Palestinian group Hamas.
The attacks have disrupted global shipping, forcing firms to make longer and more expensive journeys around Southern Africa for more than a year.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil set for fourth weekly gain
Latest US sanctions on Russian energy trade hit supply, pushing up spot trade prices and shipping rates
Tokyo/Singapore — Oil prices rose on Friday and headed towards a fourth consecutive weekly gain as the latest US sanctions on Russian energy trade hit supply and pushed up spot trade prices and shipping rates.
Brent crude futures rose 44c, or 0.5%, to $81.73 a barrel by 4.43am GMT, US West Texas Intermediate (WTI) crude futures were up 62c, or 0.8%, to $79.3 a barrel. Brent and WTI have gained 2.5% and 3.6% so far this week.
“Supply concerns from US sanctions on Russian oil producers and tankers, combined with expectations of a demand recovery driven by potential US interest rate cuts, are bolstering the crude market,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
“The anticipated increase in kerosene demand due to cold weather in the US is another supportive factor,” he said.
The Biden administration last Friday announced widening sanctions targeting Russian oil producers and tankers, followed by more measures against Russia’s military-industrial base and sanctions-evasion efforts.
Moscow’s top customers China and India are now scouring the globe for replacement barrels, driving a surge in shipping rates.
Investors are also anxiously waiting to see any more supply disruptions as Donald Trump takes office next Monday.
“Mounting supply risks continue to provide broad support to oil prices,” ING analysts wrote in a research note, adding the incoming Trump administration was expected to take a tough stance on Iran and Venezuela, the two main suppliers of crude oil.
Better demand expectations also lent some support to the oil market with renewed hope of interest rate cuts by the US Federal Reserve after data showed easing inflation in the world’s biggest economy.
Inflation is likely to continue to ease and possibly allow the US central bank to cut interest rates sooner and faster than expected, Federal Reserve governor Christopher Waller said on Thursday.
Meanwhile, China’s economic data on Friday showed higher-than-expected economic growth for the fourth quarter and for the whole of 2024, as a flurry of stimulus measures came into effect.
However, China’s oil refinery throughput in 2024 fell for the first time in more than two decades barring the pandemic-hit year of 2022, government data showed on Friday, as plants pruned output in response to stagnant fuel demand and depressed margins.
Also weighing on the market was that Yemen’s maritime security officials said the Houthi militia is expected to announce a halt in its attacks on ships in the Red Sea, after a ceasefire deal in the war in Gaza between Israel and the militant Palestinian group Hamas.
The attacks have disrupted global shipping, forcing firms to make longer and more expensive journeys around Southern Africa for more than a year.
Reuters
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