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Investing.com -- New U.S. sanctions targeting Russia’s top oil producers could threaten global supply and drive Brent crude prices sharply higher, Barclays warned in a note to clients on Friday.
The U.S. Department of Treasury this week imposed sanctions on Rosneft and Lukoil, which together account for “slightly over half of crude oil and condensate production in Russia,” Barclays said.
The bank described the move as a “change in tack to end the war in Ukraine,” noting that it “marks a significant shift in the U.S. approach” after diplomatic efforts have failed to bring the conflict to an end.
Barclays said the market remains “relatively sanguine,” but cautioned that a potential sustained supply disruption poses asymmetric upside risk to prices.
In particular, the analysts warned that if Russian oil exports to India were to halt completely, “that would completely wipe out the expected surplus next year and push Brent above $85/b in our view.”
The Treasury has issued a temporary license allowing risk-reducing and maintenance transactions until November 21, after which “all transactions, trades, and deals ultimately benefiting Rosneft, Lukoil, and their subsidiaries, is prohibited,” according to Barclays.
Still, the bank said that “market participants seem skeptical that there will be a large, sustained disruption in Russian oil exports,” pointing to the sector’s resilience since 2022 despite previous sanctions and infrastructure attacks.
Russia’s total oil exports have averaged 6.9 million barrels per day this year, compared with 7.3 mb/d in 2023 and 7.1 mb/d in 2024, Barclays said.
“Oil markets were going through a period of unsettling calm of late,” the analysts added.