Oil prices hit their highest level in more than three months on Monday’s open, extending their rally on expectations that wider U.S. sanctions will affect Russian crude supplies to the world’s top and third largest importers China and India.
Brent crude futures climbed $1.35, or 1.69%, to $81.11 a barrel by 2339 GMT after hitting an intraday high of $81.44, the highest since Aug. 27.
U.S. West Texas Intermediate crude rose $1.40, or 1.83% to $77.97 a barrel after touching a high of $78.32, the loftiest price since Oct. 8.
The U.S. Treasury on Friday imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that have shipped Russian oil, targeting the revenue Moscow has used to fund its war with Ukraine.
Russian oil exports will be hurt severely by the new sanctions, pushing top buyers China and India to source more oil from the Middle East, Africa and the Americas, which will boost prices and shipping costs, traders and analysts said.
“The last round of OFAC sanctions targeting Russian oil companies and a very large number of tankers will be consequential in particular for India,” said Harry Tchilinguirian, head of research at Onyx Capital Group.
(Reporting by Florence Tan in Singapore Editing by Matthew Lewis)