Demand to lock in oil and gas prices jumped to a record high on Friday on the AEGIS hedging marketplace, as the harshest U.S. sanctions yet on Russian energy trade sent oil prices to multi-month highs.
AEGIS, which says its clients’ business represents about 25-30% of total U.S. oil production, recorded the highest trading activity to date on its platforms on Jan. 10, as producers capitalized on higher volatility, said Jay Stevens, director of market analytics at AEGIS.
Hedging can help producers reduce risk and protect their production from sharp moves in the market by locking in a price. It can also give traders opportunities to profit from volatility.
West Texas Intermediate (WTI) crude futures settled at $76.57 per barrel on Jan. 10, marking a three-month high. Global benchmark, Brent crude futures settled at $79.76 a barrel, after earlier in the session exceeding $80 a barrel for the first time since Oct.7.
Oil prices began to climb after traders in Europe and Asia circulated an unverified document detailing the sanctions.
Later on Friday, the U.S. Treasury formally announced new sanctions on the Russian energy sector, including oil majors Gazprom Neft and Surgutneftegaz to try to curtail Moscow’s ability to fund its war with Ukraine.
The sanctions also target over 180 tankers and dozens of oil traders, oilfield service providers, insurance companies and energy officials.
(Reporting by Georgina McCartney in Houston; editing by Barbara Lewis)