Oil prices climbed nearly 3% to reach a three-month high on Friday, driven by concerns over potential supply disruptions stemming from a sweeping U.S. sanctions package aimed at cutting Russian oil and gas revenue.
The Biden administration announced fresh sanctions targeting Russian oil producers, tankers, intermediaries, traders, and ports, aiming to disrupt every link in Moscow’s oil production and distribution chains.
Brent crude futures rose $2.53, or 3.3%, to $79.45 a barrel by 1:16 p.m. EST (1816 GMT), briefly crossing $80 for the first time since October 7.
U.S. West Texas Intermediate crude futures advanced $2.38, or 3.2%, to $76.30, also marking a three-month high.
Earlier in the session, both contracts had surged more than 4% following the circulation of an unverified document detailing the sanctions among traders in Europe and Asia.
Sources involved in Russian oil trade and Indian refining told Reuters that the sanctions are expected to severely disrupt Russian oil exports to major buyers like India and China.
UBS analyst Giovanni Staunovo noted that the sanctions would likely reduce Russian oil export volumes and increase their costs.
Their timing, just days before Donald Trump’s presidential inauguration, suggests Trump may retain the sanctions as leverage for negotiating a Ukraine peace treaty, Staunovo added.
Extreme cold weather in the U.S. and Europe also bolstered oil prices by driving up heating oil demand, according to Alex Hodes, an analyst at StoneX.
The U.S. weather bureau forecast below-average temperatures for central and eastern regions, while Europe faces an unusually chilly start to the year.
“We have several customers in New York Harbor seeing an uptick in heating oil demand,” Hodes said, adding that bids for other heating fuels have risen as well.
U.S. ultra-low sulfur diesel futures surged 4.8% to $104.62 per barrel, the highest since July.
JPMorgan analysts projected a year-over-year increase in global oil demand of 1.6 million barrels per day in the first quarter of 2025, driven primarily by demand for heating oil, kerosene, and LPG.