WTI trades around $77.00, reaches three-month highs following US sanctions on Russian Oil
- WTI price reached $77.46, a level not seen since October 8, on Monday.
- Oil prices have surged amid escalating concerns over potential supply disruptions triggered by US sanctions on Russia's oil industry.
- US Treasury targeted producers Gazprom Neft and Surgutneftegas, disrupting Russia's ability to supply Oil to China and India.
West Texas Intermediate (WTI) Oil price extends its gains for the third consecutive session, hovering around $77.00 per barrel, near $77.46—levels not seen since October 8—during the Asian trading hours on Monday. Crude Oil prices continue to climb amid growing concerns over potential supply disruptions triggered by new US sanctions on Russian Oil.
On Friday, the US Treasury introduced broader sanctions on Russian Oil, targeting producers Gazprom Neft and Surgutneftegas, as well as 183 vessels involved in transporting Russian Oil. These restrictions are expected to significantly disrupt Russia's ability to supply Oil to key markets like China and India, compelling these countries to explore alternatives in regions such as the Middle East, Africa, and the Americas.
RBC Capital analysts, as reported by Reuters, noted in a statement, "The new Russian sanctions from the outgoing administration represent a net addition to at-risk supply, introducing more uncertainty to the first-quarter outlook." The latest round of sanctions targets ships involved in 1.5 million barrels per day of seaborne Russian crude oil activity on average in 2024. This includes 750,000 bpd of exports to China and 350,000 bpd to India.
Additionally, Oil demand has risen following a stronger-than-expected US jobs report released on Friday, which signaled economic strength. In recent weeks, crude prices have been further supported by increased winter energy demand, declining US inventories, and speculation surrounding the policies of President-elect Donald Trump's incoming administration.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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