Oil price rally continues after U.S. sanctions Russia's biggest oil sellers

The oil price rally that kicked off last week after the Biden administration announced the harshest sanctions yet on Russian oil has carried over into the new week. 

WTI crude for February delivery was up 3.0 per cent to change hands at $78.77 per barrel while Brent crude for March delivery was trading at $81.18 per barrel at 12.00 pm ET, good for a 1.8 per cent increase. 

Last week, Reuters reported that a purported U.S. Treasury document circulating among traders in Europe and Asia, revealed that some 180 vessels, several senior Russian oil executives, dozens of traders and two major oil companies are targeted by the sanctions. 

Later, it emerged that the Biden administration has targeted Surgutneftgas and Gazprom Neft, two firms that handle 25 per cent of Russian oil exports. The two companies shipped an average of 970,000 bbls a day in 2024.

Meanwhile, India has announced that it will abide by the sanctions and turn away sanctioned tankers. Previously, we reported that the sanctions would severely disrupt Russian oil exports to India and China--the biggest buyers of Russian crude--and could also give Trump more leverage in future negotiations as he tries to end the war in Ukraine. 

Last year, India briefly overtook China as the largest buyer of Russian crude. However, India's import of Russian oil in November plummeted 55% Y/Y to its lowest point since June 2022. This could be the result of the country trying to diversify its oil supplies to avoid overlying on a single country. 

In November, Indian Prime Minister Narendra Modi said during a visit to Guyana that his government views Guyana as key to India’s energy security. Modi told a special sitting of Parliament that he views Guyana as an important energy source and that he will encourage large Indian businesses to invest in the country.

India’s energy security has been severely compromised by the ongoing Middle East conflict. Whereas a lot of focus lately has been on India’s surging imports of Russian oil, the country actually buys the lion’s share of its oil from the Middle East.