Oil continues to rise despite US easing sanctions on Russian crude

Oil prices continued to rise today despite US efforts to ease supply concerns by issuing a limited licence to buy Russian oil. Around 9:00 CET, Brent crude was up 1.8 percent at more than 102,20 USD per barrel. US light crude West Texas Intermediate (WTI) was up 1.5 percent, trading at 97,16 USD per barrel

Oil is also significantly more expensive on a weekly basis. Brent closed on Thursday at its highest price in almost four years and is heading for a weekly gain of nearly ten percent. WTI is on track for a weekly rise of more than six percent.

The United States on Thursday authorised the purchase for 30 days of Russian oil already loaded onto tankers at sea. The measure mainly affects countries that were already buying Russian oil, particularly India and China. It aims to stabilise global energy markets roiled by the war against Iran launched by the United States and Israel. According to Russian envoy Kirill Dmitriev, who discussed the issue with US officials in Florida on Wednesday, the exemption will cover about 100 million barrels of Russian oil.

Analysts, however, say this will not resolve broader supply constraints. “Brent futures have already crossed the 100 USD per barrel mark and remain supported today, despite efforts to calm markets with an exemption for Russian oil and an unprecedented release of emergency reserves,” said LSEG analyst Emril Jamil. The market sees this as only a short-term solution that does not address the underlying supply disruption, he said. Other analysts say the most important thing is to restore shipping through the Strait of Hormuz.

Brent is rising more than WTI because Europe is more sensitive to energy security concerns. The United States is also able to meet demand with domestic production, Jamil added.

Washington’s decision follows Wednesday’s announcement by the International Energy Agency (IEA) that it would release a record 400 million barrels of oil from emergency reserves. The move responds to disruption in the oil market caused by the effects of the war in the Middle East. The short-term relief the IEA announcement brought to the market was wiped out by a further escalation of the conflict in the Middle East, IG analyst Tony Sycamore told Reuters.

Oil prices in dollars per barrel (about 159 litres)