The price of oil is nearing $90 a barrel after the United States tightened sanctions against Russian crude exports.
Brent crude traded up 3.6% at US$89.09 per barrel while West Texas Intermediate (WTI) crude traded 3.7% higher at $85.95 shortly before noon Eastern Time on Friday.
The US Department of Treasury’s Office of Foreign Assets Control on Thursday said it was imposing sanctions on two shipping companies carrying Russian crude priced above an international colation's cap of $60 a barrel.
In December 2022, the G7, the European Union, and Australia introduced a price cap on Russian crude oil and petroleum products to ensure a reliable supply is maintained while reducing the profits earned by the Russian Federation as its war on Ukraine inflated global energy prices.
“Today’s action demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap,” Deputy Secretary of the Treasury Wally Adeyemo said in a statement.
Also buoying oil prices are concerns the Israel-Hamas war could disrupt output from the Middle East. However, analysts believe this spike will be temporary because Israel is not a significant oil producer.
“Oil and gas prices rallied as Qatar mooted the possibility of an export ban on gas as long as Israel maintains its blockade of Gaza and as the US tightened sanctions against Russian crude exports,” noted IG market analyst Alex Rudolph.
“The oil price surged by over 3% on Friday and natural gas futures in Europe by around 40% this week as cooler temperatures are expected to lead to increased demand and supply concerns bite."
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