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The United States’ sweeping sanctions on Russian oil supplies have pushed global oil prices to $81 a barrel, their highest in two to five months.

Brent crude rose 4 percent to $81 a barrel on Friday, according to a Bloomberg report, as the United States imposed its toughest sanctions yet on Russia’s oil industry, targeting major exporters, insurers and more than 150 tankers.

The move, which comes less than two weeks before Donald Trump takes office as US president, will prompt refiners in India and China to look for alternatives to Russian oil. India has been a major buyer of Russian oil since Russia invaded Ukraine in 2022, and China is the world’s largest oil importer. According to Morgan Stanley analysts, the new US sanctions on the Russian oil industry have exceeded expectations, will take time to digest these measures and will introduce downside risks to oil supply for at least a period.

Strong start for oil in 2025

Crude oil has started the year on a rally, driven by cold weather, a decline in U.S. inventories and speculation that Trump administration officials may impose restrictions on oil flows from Iran in the coming months. Biden’s sweeping sanctions package could also cause further disruption and potentially change the market framework for OPEC+, as the alliance aims to lift supply curbs later this year after months of delays.

Inflationary effects of rising black gold prices

The surge in oil prices could also pose a challenge for central banks, including the Federal Reserve, in their fight against inflation. Investors have scaled back expectations for the pace of interest rate cuts by the Federal Reserve this year as the U.S. economy remains strong, while price pressures persist.

While it is not yet clear how the sanctions will affect the actual flow of oil for producers, shippers, traders and consumers, some early signs of disruption have emerged, with three tankers carrying more than 2 million barrels of Russian oil floating in waters east of China after the sanctions.

Major banks’ predictions of the impact of sanctions on the actual flow of oil

Citigroup believes that 30 percent of Russia’s shadow tanker fleet will be affected by the sanctions, which could cut up to 800,000 barrels per day, although the actual reduction could be less than half that. Goldman Sachs, however, said it had not changed its expectations for Russian oil supply, as crude could be offered at much lower prices to entice buyers.

OPEC+, of which Russia is a member, has planned to gradually restore production from April, and its members have significant spare capacity. Buyers, particularly from India, are likely to look to alternative sources in the Middle East, said Harry Chiligorian, head of research at investment group Onyx Capital.

News Code: 4031011