Oil Reaches Four-Month High On Russian Sanctions As Trump Effect Looms

Analysts are now focused on how the next U.S. president will handle foreign affairs: File Image/Pixabay

Oil prices maintained their upward trajectory on Tuesday, achieving a four-month high and buoyed by the expectation that Washington's fresh sanctions against Russia will disrupt supplies.

This single element was influential to the point where possible peace in the Middle East and a stronger U.S. dollar were shrugged off by traders.

Brent settled up $1.25, or 1.6 percent, at $81.01 per barrel, while West Texas Intermediate settled up $2.25, or 2.9 percent, at $78.82.

Both commodities have risen 6 percent over the past three trading sessions, causing time spreads to soar to their highest level in several months.

Tamas Varga, analyst at PVM, said of the sanctions,  "There are genuine fears in the market about supply disruption; the worst-case scenario for Russian oil is looking like it could be the realistic scenario, but it's unclear what will happen when Donald Trump takes office next Monday."

Bloomberg observed, "While the full impact of the latest U.S. sanctions package remains uncertain, it may drive a rerouting of global flows as users across Asia, including refiners in India and China, are forced to reach far and wide for replacement barrels."

For its part, Russia's Foreign Ministry stated that, "Naturally, Washington's hostile actions will not go unanswered and will be taken into account as we shape our foreign economic strategy," and it added, "Major domestic projects for oil and gas extraction, import substitution, oilfield services, and the construction of nuclear power plants in third countries will continue to move forward."

Meanwhile in the Middle East, mediators gave Israel and Hamas a final draft of a deal to end the war in Gaza after a "breakthrough" in talks, but as of press time there was no indication the deal would be accepted.

Another occurrence that may likely affect trading in the near future came from Canada, where Alberta premier Danielle Smith warned media that Trump could indeed impose 25 percent tariffs against her country next week, especially since outgoing prime minister Justin Trudeau suspended parliament, and that such tariffs would be ruinous to both countries.