Oil prices surge as expanded U.S. sanctions target Russian oil exports

Oil prices continued their upward trend for the third consecutive session on Monday, with Brent crude reaching its highest level in four months amid expectations of tightened supply due to expanded U.S. sanctions on Russian oil, Azernews reports.
Brent crude futures rose $1.48, or 1.86%, to $81.24 a barrel as of 06:30 Baku time, briefly touching $81.49, the highest since late August. Meanwhile, U.S. West Texas Intermediate (WTI) crude climbed $1.53, or 2%, to $78.10 a barrel, reaching a session peak of $78.39, the highest since October.
Both benchmarks have surged over 6% since January 8, fueled by the U.S. Treasury Department's latest sanctions targeting Russian oil producers and tankers. The expanded measures, announced last Friday, aim to reduce Moscow's oil revenue, which funds its war in Ukraine.
The sanctions impact major Russian oil companies such as Gazprom Neft and Surgutneftegas and restrict operations of 183 vessels involved in transporting Russian crude.
“The new sanctions will severely disrupt Russian oil exports and force major importers like China and India to seek alternative crude supplies from the Middle East, Africa, and the Americas, leading to higher prices and increased transportation costs,” analysts noted.
According to market estimates, the sanctions could impact up to 1.5 million barrels per day of Russian seaborne crude exports in 2024, including 750,000 barrels bound for China and 350,000 for India.
Many of the affected tankers were previously instrumental in transporting Russian crude to Asian markets after European sanctions and G7 price caps in 2022 redirected trade flows. Some of these vessels also transported sanctioned Iranian oil.
Experts warn that the sanctions, along with existing logistical challenges, could cause significant disruptions to global crude flows and increase volatility in oil markets during the first quarter of the year.
The expanded measures are expected to particularly impact India, one of the largest importers of Russian crude, potentially reshaping energy supply dynamics in the region.
In comparison, Azerbaijan’s state budget for 2024 was based on a more conservative estimate of $75 per barrel, which was exceeded by the actual average. For 2025, the budget has been adjusted to an even more cautious projection of $70 per barrel, reflecting efforts to navigate uncertainties in the global energy market.
The revelation of Azeri Light oil prices coincides with a surge in global oil prices, driven by expanded U.S. sanctions targeting Russian crude exports. As of early January, Brent crude prices have soared to their highest levels in four months, with futures reaching $81.49 per barrel, while U.S. West Texas Intermediate (WTI) crude climbed to $78.39 per barrel.
Experts attribute this rise to the U.S. Treasury Department’s sanctions on Russian oil companies and tankers, which are expected to disrupt Russian exports by up to 1.5 million barrels per day. These measures have forced major importers like China and India to seek alternative supplies from regions such as the Middle East, Africa, and the Americas, further straining global supply chains.
Amid these developments, Azerbaijan’s consistent performance in oil exports positions it as a reliable player in the global energy market. The country’s Azeri Light crude, known for its high quality, remains a sought-after product, ensuring steady revenue for the nation.
Azerbaijan has also actively engaged in strengthening its energy partnerships. The recent price trends align with its strategic goals of diversifying its energy exports and maintaining financial stability despite global market fluctuations.
With geopolitical tensions and sanctions reshaping energy trade routes, Azerbaijan’s role as a stable oil exporter is expected to remain significant in 2025 and beyond. The government’s prudent budgeting strategy, coupled with robust production capacities, ensures resilience in navigating the challenges of the evolving energy landscape.
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