Oil is experiencing a frenetic day with the European benchmark barrel, the brent, shooting up to 4.22% until it exceeds 80 dollars a barrel. These movements come after it was announced that the US will impose one of the toughest rounds of sanctions in memory to try to hit Russian industry. Specifically, he will go all out for Putin’s ‘ghost fleet’. According to Reuters, Washington will impose measures against more than 180 ships and two major oil companies.
According to Reuters, the main sanctions will be concentrated against Gazprom Neft and Surgutneftegaz, and the naval insurance providers Ingosstrakh and Alfastrakhovanie, which They cover most of the ships supplying Russian oil to India. This country is Moscow’s main oil buyer and is part of Putin’s strategy to redirect shipments from Europe to Asia. A plan that has been gradually implemented since the beginning of the conflict. Thus, Indian refineries that accept Russian crude oil will see serious consequences for their activity.
From Bloomberg they point out that this fear of US oil sanctions is already causing movements in the market. Specifically, it has been announced that this week two Indian refineries They have bought 6 million barrels of crude oil to Oman and Abu Dhabi for an emergency shipment in February. According to them, this change would be due to a forecast deficit in Russian shipments. A surprising situation given that India has been trying for some time to diversify its offer with respect to Middle Eastern countries, which have historically been its major suppliers. This decision marks a stop along the way.
India has not been the only one to make similar decisions. Chinese buyers, like the state Unipec or private refineries in Shandong, increased imports of Angolan oil. These traders have also indicated that they have sought quick supplies from Abu Dhabi. All of these companies fear that the sanctions on the oil tankers used to transport crude oil from the Urals to oil companies around the world will be intensified and that they will avoid the sanctions already imposed through this ‘ghost fleet’.
This decision, presumably, would have been due to a tariff wave by Donald Trump ahead of his arrival at the White House. However, events are happening very quickly and Now it seems that he could be the outgoing Executive the one who promoted this improvement. This would be a document that would already exist within the US Treasury Department and that would have already been transferred to some European and Asian operators this Friday. According to the letter that would have reached various firms in the sector, the Treasury Department would offer 12 transition days until March 12 for some transactions to be completed.
This latest rise is being the latest in a series of boosts for oil, which is trapped in an upward spiral since last week of December 2024. Since then, when the barrel was trading below $73, a turn in the market has caused three consecutive weeks of growth and a total rise of 9.5%. If this day ends with the current increases, we would be talking about the largest increase since October, when the tension of an attack by Iran on Israel.
Inventories and China add pressure
This threat of a new wave of sanctions has been mixed with a series of data that has contributed to the upward trend. Specifically US inventory data which have shown a large, above-expected reduction in reserves during the week ending January 3. This was mainly due to greater demand that increased energy consumption due to low temperatures.
US reserves, in this way, have fallen to their lowest level since 2014. As reflected by data from the American Petroleum Institute (API), there was a drop of 4,022 million barrels compared to 1,442 million the previous week. A brutal contrast to market forecasts that spoke of a decline of just 250,000 barrels.
The same has happened with global demand for crude oil, which has been increasing since the end of December due to the strong winter weather. China’s voracity has also increased significantly. According to the latest Energy Intelligence report, the Asian giant is mainly responsible for the backdrop of increases that have slowed down this week. “World crude oil prices have been rising in recent days as Beijing has promised new funds to boost investment and consumer spending.” Therefore, this new hope in a revival of the world’s second largest economy is adding to the increases in ‘black gold’.
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