Oil prices jumped to a three-month high on Friday, with traders digesting new, sweeping sanctions against Russia as the Biden Administration tries to cut off Moscow from crude revenue amid the ongoing war in Ukraine.
West Texas Intermediate crude (CL=F) rose as much as 4% to $77 per barrel before paring gains, while Brent crude futures (BZ=F), the international benchmark price, gained 2% to hit $80, the highest level since October.
More than 180 vessels, two oil companies, traders, insurers, and top Russian executives were named in the sanctions.
“The United States is taking sweeping action against Russia’s key source of revenue for funding its brutal and illegal war against Ukraine,” Secretary of the Treasury Janet Yellen said in a statement.
Oil prices were already on an upward trend since late December, with traders uncertain over President-elect Trump’s policy toward Iran. Tehran currently produces more than 3 million barrels of a crude per day.
“News continues to filter in about [the] Trump administration’s hard stance on Iran that may come very quickly,” Dennis Kissler, senior vice president at BOK Financial, said in a note to clients on Friday.
“Add in the freezing temps across most of the US, along with shrinking storage numbers, and crude has now become a new ‘fund favorite,'” he added.
JPMorgan analysts said global oil demand is expected to remain strong through January due to colder-than-expected weather in the Norther hemisphere “boosting heating fuel consumption” and early travel activities in China for the country’s Lunar New Year holiday.
Despite Friday’s sharp rise, many analysts expect that oil prices will move lower this year than in 2024.
“Despite ongoing geopolitical conflicts, a combination of bearish factors will likely keep oil prices structurally low in 2025, with a likely price range of $60-$80 per barrel for Brent spot crude oil. That would be below the $70-$90 per barrel range that dominated 2024,” said a Eurasia Group note on Thursday.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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