2025.01.13

Oil prices hit three-month high as US imposes stiff sanctions on Russian oil

Oil prices surged by nearly 3% to a three-month high as the US implemented stiff sanctions on Russian oil. (Brent crude settled at $79.76 //U.S. West Texas Intermediate crude settle at $76.57 per barrel)

The sanctions target every aspect of Moscow's oil production and distribution chains, causing disruptions in supply. Brent crude futures rose by 3.7% to $79.76 per barrel, with West Texas Intermediate also hitting a three-month high. Traders anticipate that the sanctions will severely impact Russian oil exports to major buyers like India and China. The extreme cold in the US and Europe has also increased demand for heating oil, further boosting oil prices. JPMorgan analysts predict a significant increase in global oil demand in the first quarter of 2025 due to the rising need for heating oil, kerosene, and LPG.

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US Targets Russian Oil with Harshest Sanctions Yet to Aid Ukraine and Influence Peace Talks

The Biden administration has enacted its most comprehensive sanctions against Russia’s oil sector, aiming to weaken Moscow’s primary revenue source for its war in Ukraine. Key targets include major oil companies Gazprom Neft and Surgutneftegas, as well as 183 vessels used to transport Russian oil, many operating in a shadow fleet. The measures also eliminate exemptions for financial intermediaries facilitating energy transactions.

The sanctions, expected to cost Russia billions monthly, are designed to strengthen Ukraine’s position in future peace talks and provide leverage to the incoming Trump administration. They have already disrupted Russian oil exports to major buyers like India and China, while global oil prices have risen.

The U.S. believes increased oil output from countries like the U.S., Canada, and Brazil will counteract any supply shortages. The sanctions align with $64 billion in U.S. military aid to Ukraine and are expected to exacerbate Russia’s economic troubles, including high inflation and a weakened ruble.

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Russian President Putin to Find Alternative Gas Delivery to Slovakia After Ukraine Stoppage

Slovak Prime Minister Robert Fico revealed that Russian President Vladimir Putin promised to find alternative ways for Gazprom to deliver gas to Slovakia after Ukraine stopped gas flows from Russia. The promise was made during a December meeting between the leaders, where Fico expressed his dissatisfaction with Ukraine's decision. Despite Ukraine's refusal to renew a transit deal in order to cut revenues going to Russia, Putin assured Fico that Russia would fulfill its obligations. Fico mentioned the possibility of using the southern flow route through Turkey and utilizing connections to gas networks in western Europe to meet gas needs. However, Ukraine's foreign ministry blamed Russia for the end of gas transit and criticized certain politicians for their dependence on Moscow. The European Union has stated that there is no fuel shortage, as countries have access to alternative supplies. Fico argued that Europe faced financial losses due to the rise in gas prices caused by the absence of gas flows through Ukraine. An agreement to continue gas shipments through Ukraine with Russian gas changing ownership was close to being reached, but Ukraine's President rejected extending the gas flows at the EU summit in December.

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Greek shipowner's aframax tanker collides with UK-sanctioned vessel at Russian port, sparking dispute

Greek shipowner George Economou's aframax tanker collided with a UK-sanctioned tanker at the Russian port of Ust-Luga on New Year's Eve, resulting in a dispute between the two vessels. The incident led to both ships, the Calida and the Laconia, being detained at Ust-Luga anchorage No 2. Both vessels have filed damage claims against each other, with the Laconia's owners claiming damages of around $1.2m and the Calida's owners declaring damages exceeding $3.3m. The incident has not caused any reported environmental damage, however, both ships remain detained as the settling-dispute process continues. The port authorities issued orders for both vessels to be detained for three working days so that their owners or agents can deposit sufficient security. Once this is completed, the vessels will be released unless further rulings are made to arrest them. The Laconia has since changed its name to Starlit and changed its flag from Gabon to Djibouti. The incident involved the violation of energy transport sanctions imposed by the UK on Russia over its invasion of Ukraine.

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German Rescue Services Stabilize Suezmax Tanker Eventin in Baltic Sea After Power Cut

German rescue services intervened to stabilize a suezmax tanker, Eventin, in the Baltic Sea after a power cut left it unable to steer. The ship, managed out of Dubai and carrying Russian cargo, was drifting at low speed. No evacuation was necessary for the 24 crew members. The Central Command for Maritime Emergencies deployed an emergency tug boat to assist the disabled vessel. The Eventin, flagged in Panama, was en route from Russia to the Indian subcontinent with 99,000 tonnes of crude oil. Two additional tug boats were sent to the area along with a government vessel for assistance. The harsh weather conditions required the focus to be on securing the Eventin in its current location, with plans for towing it to port still under evaluation.