Oil Prices Rise Following the EU’s Agreement to Impose Additional Sanctions on Russia

Global oil prices climbed for the third consecutive trading day on December 11 (local time), following the European Union (EU)’s agreement to impose additional sanctions on Russian oil.

At the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude for January delivery settled at $70.29 per barrel, up $1.70 (2.48%) from the previous day. This marks the first time WTI has closed above $70 since November 22.

On the ICE Futures Europe, Brent crude for February delivery increased by $1.33 (1.84%) to $73.52 per barrel.

EU announced that its ambassadors had agreed on a 15th package of sanctions on Russia over its war against Ukraine, targeting its “shadow fleet” of oil.

The shadow fleet refers to a group of tankers Russia uses to transport oil while circumventing Western sanctions. These tankers are typically older, lack standard Western insurance, and frequently change names and flags. The shadow fleet serves as a vital funding source for Russia and President Vladimir Putin as the war in Ukraine persists.

Analysts predict that if the EU’s sanctions limiting Russian oil flows take effect, oil supplies could tighten.

Moreover, Bloomberg’s report that the U.S. is mulling additional sanctions on Russian oil has added upward pressure on prices. The Biden administration is reportedly considering directly restricting some Russian oil exports or targeting the shadow fleet with sanctions.

U.S. Treasury Secretary Janet Yellen stated that the U.S. continues to explore innovative ways to create more opportunities for sanctions aimed at reducing Russian oil imports and decreasing global oil demand.