The Biden administration’s new sanctions on Russia’s oil sector have triggered a crude price surge and rattled global equities.
Crackdown on Russian Oil Giants and Shadow Fleet
On Friday, the US Treasury unveiled expanded sanctions targeting key players in Russia’s oil industry, including Gazprom Neft and Surgutneftegas. The measures also blacklist 183 vessels linked to Russia’s shadow fleet, which is used to bypass existing sanctions.
Treasury Secretary Janet Yellen explained that these steps build on the G7+ price cap strategy and aim to further restrict Moscow’s oil revenues, a major source of funding for its war in Ukraine. The sanctions include a ban on US petroleum services for Russian extraction, set to take effect in February 2025.
This coordinated effort, aligned with similar UK sanctions, seeks to disrupt Russia’s risky shipping operations and limit its global market access.
Oil Prices Rally as European Stocks Slide
Crude prices surged in response to the sanctions. West Texas Intermediate (WTI) rose 3.5% to $77 per barrel, while Brent crude gained 2.9%, reaching $79.
European stock markets tumbled amid fears of tighter global oil supplies. The Euro STOXX 50 index fell 0.9%, and the Euro STOXX 600 dropped 0.6%. Energy-reliant stocks, including E.ON and Iberdrola, recorded losses exceeding 4%. Spain’s IBEX 35 was hit hardest, falling 1.4%.
Strong US Jobs Data Boosts Dollar
The sanctions coincided with robust US employment data, further strengthening the dollar. December’s nonfarm payrolls report revealed 256,000 new jobs, far exceeding the forecast of 160,000. This marked the strongest job growth since March 2024.
In currency markets, the euro fell 0.5% to $1.0250, its lowest point since October 2022, while the British pound dropped 0.6% to $1.2220, a level not seen since November 2023. The dollar’s rise underscored market uncertainty over the broader economic impact of the sanctions.