The sanctions imposed by Washington on the Russian oil and gas industry are giving the oil price a boost. The oil price has been rising since the beginning of this year and has now broken through the €80 barrier.
The €80 was last passed on October 7th. On Monday the price was $81,01, the highest point since late August. At the time of writing (Wednesday afternoon, January 15th) the oil price is $80,71.
The International Energy Agency (IEA) in its monthly oil market report of January 15 points to stricter sanctions on Russian and Iranian oil and the harsh winter in parts of the US as reasons for the price increase.
On Friday, the US imposed sanctions on Russian energy companies Gazprom and Surgutneftegas, 183 tankers, traders and insurers. There are currently five tankers with a total of almost 4 million barrels of crude oil at anchor in Chinese waters that should have already unloaded their cargo, according to Bloomberg. Four of them have been sanctioned by Washington. Although the sanction is not yet applicable to these tankers, the news agency says Chinese ports are wary. The United Kingdom has also announced sanctions, following the US.
Optimism over Gaza ceasefire
Meanwhile, there is optimism about a ceasefire between Hamas and Israel in the Gaza Strip, which would also include the phased release of hostages (almost a hundred are still being held). Earlier reports of an imminent ceasefire caused the oil price to fall. It is possible that otherwise the oil price would have risen even more, but it is also possible that the market is taking a more wait-and-see attitude since previous negotiations have failed. It is also questionable how long a ceasefire will last.
In its monthly report, also published yesterday (January 15), OPEC keeps its forecast for oil demand growth for 2025 unchanged at 1,4 million barrels per day. The forecast for production growth from non-OPEC+ countries is also the same as last month, at 1,1 million barrels per day year-on-year. OPEC expects the largest growth in oil supply from the US, Brazil, Canada and Norway.
US oil production to hit ceiling in 2025
In an outlook also published yesterday, the US Energy Information Administration (EIA) expects global oil consumption growth to remain below pre-pandemic levels. The EIA expects demand to grow by 2025 million barrels per day in 1,3 and 2026 million barrels per day in 1,1. According to the government agency, the increase will mainly come from Asia, particularly India. Despite Trump's (who will become president in five days) promise to increase US oil production ("drill, baby, drill"), the EIA expects oil production to reach a ceiling of 2025 million barrels per day in 13,5 (was 13,2 million in 2024), and that this will not be broken in 2026.