A view of the Esther offshore oil and gas platform in the Pacific Ocean on January 5, 2025 in Seal Beach, California.
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Oil prices surged on Friday after the US Treasury announced sweeping sanctions on the Russian oil industry.
Brent gained $1.92, or 2.5%, to $78.84 a barrel by 11:12 a.m. ET, while American crude oil rose $1.89, or 2.56%, to $75.81 per barrel. Brent broke through $80 a barrel for the first time since October on the same day, reaching a session high of $80.75.
The sanctions target Russian oil companies Gazprom Neft and Surgutneftegaz and their subsidiaries, over 180 tankers, and more than a dozen Russian officials and energy executives. The sanctioned directors include Gazprom Neft CEO Aleksandr Valeryevich Dyukov.
According to the Treasury Department, the sanctioned ships are mostly oil tankers belonging to Russia's “shadow fleet,” which has avoided existing sanctions on energy exports from the country.
“The United States is taking sweeping actions against Russia's primary source of revenue that funds its brutal and illegal war against Ukraine,” Treasury Secretary Janet Yellen said in a statement.
Brent crude oil futures, 1 year
“With today's actions, we increase the risk of sanctions related to oil trade from Russia, including transport and financial facilitations supporting Russian oil exports,” Yellen said.
There is a belief in the oil market that Indian and Chinese refiners that have been importing Russian crude will have to fight for barrels from the Middle East, Bob Yawger, executive director of energy futures at Mizuho Securities, said in a note to clients on Friday.
The Biden administration has sought to increase pressure on Russia and provide aid to Ukraine before President-elect Donald Trump takes office.
“The Biden administration has moved towards more stringent energy sanctions, which has made the oil market particularly complacent about the risk of sanctions,” said Bob McNally, president of Rapidan Energy Group.
“We therefore expect today's material risk premium in Brent to persist as we await signals from the Trump team on whether they will continue with these sanctions,” McNally said.