Investing.com– Oil prices fell slightly in Asian trade on Tuesday, pulling back from a four-month high triggered by new U.S. sanctions on Russian oil exports and worries over supply disruptions.
At 20:02 ET (01:02 GMT), Brent Oil Futures were down 0.3% at $80.77 a barrel, and Crude Oil WTI Futures expiring in March edged 0.3% lower to $77.12 a barrel.
Oil has rallied in the previous two sessions, and it ended at a four-month high a day earlier as the Joe Biden administration introduced its most comprehensive sanctions package to date on Friday last week, aimed at cutting into Russia’s oil and gas revenues.
US sanctions on Russian oil could push Brent to $90/bbl
The U.S. Treasury’s latest measures target major Russian oil producers, including Gazprom (MCX:GAZP) Neft and Surgutneftegas, as well as 183 vessels involved in transporting Russian oil.
These developments are expected to significantly disrupt Russian oil exports, compelling major importers like China and India to seek alternative suppliers in regions such as the Middle East, Africa, and the Americas.
This shift sparked concerns over tightening supply and the potential for increased demand from alternative sources. Analysts believe the sanctions may prompt Russia to price its crude below $60 a barrel to remain competitive, further influencing market dynamics.
“New sanctions could push the price of Brent up to $90 per barrel for prompt delivery,” Bernstein analysts said in a recent note.
Industry participants are closely watching updates from major producers, including OPEC+, on potential supply adjustments to stabilize markets during the winter surge.
Strong dollar pressure oil
The U.S. dollar remained strong on Tuesday after the US Dollar Index surged to its highest in more than two years.
When the greenback appreciates against other currencies, it makes oil more expensive for buyers using weaker currencies. This reduced affordability often dampens demand in non-dollar-denominated economies, putting downward pressure on global oil prices.
Commodities like oil often attract speculative investment during periods of dollar weakness, leading to price hikes. However, when the dollar strengthens, traders may pivot to safer assets, such as U.S. Treasury bonds, decreasing speculative demand for crude oil.
This post is originally published on INVESTING.
