Barclays has warned that new U.S. sanctions on Russia’s biggest oil companies might shake up global oil supply and push Brent crude prices higher.
This week, the U.S. Treasury placed sanctions on Rosneft and Lukoil. These two companies together produce more than half of Russia’s crude oil and condensate. Barclays said this step is a major shift in the U.S. strategy to end the war in Ukraine, especially since diplomatic talks have not worked so far.
Right now, the oil market is staying calm. But Barclays warned that if supplies from Russia get seriously affected, oil prices could rise quickly. The bank pointed out that if Russia stops exporting oil to India completely, the world’s expected extra oil supply for next year would disappear, and Brent prices could rise above 85 dollars per barrel.
The U.S. Treasury has given a short-term license allowing limited and low-risk transactions until November 21. After that date, all business activities that benefit Rosneft, Lukoil, or their connected companies will be banned.
Even so, Barclays said many people in the market still doubt that these sanctions will cause long-lasting disruptions. Russia has managed to keep oil flowing despite earlier sanctions and attacks on its oil systems.
So far this year, Russia has been exporting around 6.9 million barrels of oil per day. That’s slightly less than 7.3 million in 2023 and 7.1 million in 2024.
Barclays summed it up by saying the oil market had been unusually calm recently, but these new sanctions could change that calm into tension very quickly.
