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    Home»Business»U.S. sanctions and limited stockpile forecasts cause oil to soar.

    U.S. sanctions and limited stockpile forecasts cause oil to soar.

    EmilyeBy EmilyeOctober 13, 2023No Comments4 Mins Read
    U.S. sanctions and limited stockpile forecasts cause oil to soar.

    U.S. sanctions and limited stockpile forecasts cause oil to soar. Following the United States’ imposition of stricter sanctions against Russian crude exports, oil prices increased by over 4% on Friday, exacerbating supply concerns in an energy market that was already highly balanced.

    Brent petroleum futures with a December expiration date increased by 4% to $89.4 per barrel on the international benchmark Brent crude futures market, while front-month November U.S. West Texas Intermediate crude futures rose 4.1% to $86.3 per barrel.

    The return to $90 per barrel in price follows sanctions imposed by the United States on Thursday against two shipping companies alleged to have violated the G7’s oil price ceiling. The quota is a mechanism intended to ensure a consistent supply of Russian oil to the market while limiting the Kremlin’s war chest.

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    “The enforcement of our sanctions is vital to our effort to restrict the oil trade profits of Russia.” “The purpose of the price cap is to maintain the flow of Russian oil while imposing new costs on Russia; it is not intended to reduce oil supply,” a Treasury spokesperson emailed CNBC.

    “Oil prices did, in fact, decline in the hours that followed the announcement.” They further stated, “Oil prices are naturally sensitive to various factors, including the ongoing conflict in the Middle East.”

    On December 5 last year, the G7, Australia, and the EU imposed a $60-per-barrel price restriction on Russian oil. It coincided with the EU and UK’s decision to prohibit the importation of Russian crude oil via sea.

    At that juncture, the measures were considered collectively the most substantial action taken to reduce the export revenues of fossil fuels, which are financing Russia’s invasion of Ukraine.

    The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury announced on Thursday that sanctions would be imposed on two owners of tankers transporting Russian oil at prices exceeding the price limit. These owners were located in Turkey and the United Arab Emirates, respectively.

    It has been reported that the YasaGolden Bosphorus tanker, under the ownership of Ice Pearl Navigation Corp. of Turkey, transported crude oil with a price limit exceeding $80 per barrel.

    The SCF Primorye, owned by Lumber Marine SA of the United Arab Emirates, transported Russian oil priced at more than $75 per barrel from a port in Russia after the price limit mechanism went into effect, according to OFAC.

    Wally Adeyemo, deputy secretary of the Treasury, stated that the action to restrict Russian oil sales “demonstrates our continued commitment to reduce Russia’s resources for its war against Ukraine and to enforce the price cap.”

    Adeyemo further stated, “We maintain our steadfast dedication to executing a price cap policy that serves two objectives: diminishing the oil revenues that Russia uses to fund its illegitimate conflict with Ukraine; and ensuring the stability and adequacy of worldwide energy markets despite the turmoil engendered by Russia’s unprovoked incursion into Ukraine.”

    “Att a haze of uncertainty.”

    Market participants are also keeping a close eye on the repercussions of the intensifying Israel-Hamas conflict, which has increased apprehensions that energy production in the region may be impacted. Over one-third of worldwide maritime commerce is conducted in the Middle East.

    Thursday, the International Energy Agency issued a statement characterizing market conditions as “tumultuous” but added that the Israel-Hamas conflict had not yet significantly affected physical supply.

    To allay market apprehensions, the IEA stated that it is prepared to take action to ensure that markets are “adequately supplied” in the event of an unexpected supply shortage.

    In response, member nations must release emergency supplies and/or implement demand restraint measures mandated by the energy agency.

    Israel does not possess a significant oil production capacity, and substantial oil infrastructure is absent near the Gaza Strip.

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    Emilye

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