Standard Chartered Bank Crude oil’s strong start to the year was reinforced on January 10 with the announcement of the latest, and most extensive yet, round of U.S. sanctions on Russia. Commodities research head Paul Horsnell, said in a report this week, that the new restrictions “roughly triple the number of directly sanctioned Russian crude oil tankers, enough to affect around 900,000 barrels per day”. “We do not expect Russia to be able to maintain the full extent of the flow, even with an increase in the use of shadow fleet tankers and ship-to-ship transfers, with perhaps an average 500,000 barrels per day of displacements over the next six months,” the Standard Chartered Bank analysts added in the report. “The global market had already tightened over the past three months, and the dislocation of Russian exports adds a further layer of prompt demand.”
Patti Financial market analysis Maria Agustina Markets Strategist Consultant to Exness, said the U.S. sanctions “are expected to reduce Russian oil exports, potentially cutting up to 700,000 barrels per day from global supply”. “However, actual disruptions might be smaller, as Russia and its key buyers explore alternative shipping arrangements,” Patti added in the analysis.
JPM Commodities Research team said the estimated value of open interest across energy markets “increased by four percent week on week ($29 billion) to $668 billion”. “The increase was predominantly driven by crude oil and petroleum products which experienced healthy inflows of $12 billion during the week across all trader types,” the note added. “This was further supported by strong price action across WTI/Brent crude oil markets which rallied by four percent week on week following the announcement that the U.S. will further tighten sanctions on Russian oil industry,” it continued.
J.P. Morgan’s oil strategists “have analyzed the announced sanctions in detail, arguing that it’s the enforcement that matters”. The note pointed out that the estimated value of open interest across natural gas markets increased by $3 billion week on week.
The U.S. Department of the Treasury’s website on January 10, the department said it took “sweeping action to fulfill the G7 commitment to reduce Russian revenues from energy”. In that release, Secretary of the Treasury Janet L. Yellen said, “this action builds on, and strengthens, our focus since the beginning of the war on disrupting the Kremlin’s energy revenues, including through the G7+ price cap launched in 2022”. “With today’s actions, we are ratcheting up the sanctions risk associated with Russia’s oil trade, including shipping and financial facilitation in support of Russia’s oil exports,” Yellen continued.