Oil extended gains to hit a five-month high on Monday as worries grew over supply disruptions impacting big importers China and India following wide-ranging sanctions against Russian crude.
West Texas Intermediate crude (CL=F) rose nearly 3% to settle at $78.82 per barrel, the highest level since August, while Brent futures (BZ=F) settled at $81.01.
The move higher comes after almost a 4% surge on Friday in reaction to wide-ranging sanctions against Moscow imposed by the US, targeting oil executives, traders, and more than 180 vessels, bringing the total number of ships sanctioned to 451, according to JPMorgan analysis.
“There are indications that, similar to Indian refiners who avoid taking Russian oil in tankers under sanctions or in ships insured by sanctioned Russian insurers, China is also becoming a less-permissive buyer,” JPMorgan head of global commodities research Natasha Kaneva wrote in a recent note.
Despite the recent rally, Kaneva and her team expect Brent prices to average $73 for 2025.
Oil has been on an upward trend since the start of the year, with WTI gaining nearly 8% while Brent has surged almost 7% amid colder-than-expected temperatures and falling stockpiles.
“The low temperatures have heightened energy demand for heating, leading to increased consumption of fossil fuels,” Antonio Di Giacomo, senior market analyst at foreign exchange trading platform XS.com, said in a recent note.
The Organization of Oil Producing Countries and their allies, or OPEC+, have signaled more barrels will be added to the market later this year when they begin to unwind their production cuts.
The move was repeatedly postponed last year.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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