WTI Crude Oil Futures: The Chokers of the Global EconomyLast Friday, January 10, 2025, the United States announced its most sweeping and aggressive sanctions against Russian oil trade, just ten days before Joe Biden leaves the White House and is replaced by Donald Trump.
In fact, it was more of a soap opera at first, as an unofficial document of unknown origin on the subject of sanctions had been circulating on the Web since the Fridays' morning before the official press release from the US Treasury appeared, causing the stock quotes of the companies affected by the sanctions to experience increased volatility in Friday trading on the local exchange.
Finally, about 160 oil tankers were sanctioned, and India, a key buyer of seaborne barrels, will not allow ships to call at its ports after the end of the curtailment period in March.
If these measures remain in place under Trump, they have a better chance of disrupting Russian oil exports than anything any Western power has done so far.
In addition to the tankers, sanctions were imposed on two major producers and exporters, traders arranging hundreds of shipments were listed, major insurers were named and two U.S. oil service providers were ordered to leave. A Chinese oil terminal operator was also included.
The measures could theoretically reduce what the International Energy Agency forecasts as a supply glut of nearly 1 million barrels a day this year.
Brent and WTI crude futures, which have generally traded lower for the past two and a half years, ended Friday at $80, data from ICE Futures Europe and CME Group's Nymex show.
Surgutneftegaz Sanctions RUS:SNGS and Gazpromneft RUS:SIBN are by far the most direct and aggressive move taken so far by Washington or any other Western power.
Together, the two companies shipped about 970,000 barrels of oil per day by sea in 2024, and their inclusion on the list will be a cause for concern for refineries in India as well as state-owned companies in China.
Putting their seaborne flows in context, that’s more than the global supply glut the International Energy Agency predicts for 2025. It’s also nearly 30% of Russia’s seaborne exports.
No one is suggesting that either company’s shipments will be completely shut down, but the fact that they are under sanctions, as well as other measures announced, means that supply chain disruptions and supply shortages cannot be ruled out.
Global markets, which were also hit by the December NFP report, reacted as expected.
The Nasdaq-100 immediately fell about 1%, the U.S. dollar index TVC:DXY rocketed to the moon while the yield on 10-year U.S. Treasury bonds TVC:TNX jumped nearly 10 basis points to 4.785%, its highest since October 2023.
Futures on the Dow Jones Industrial Average - a benchmark for the global economy - ended last week lower for a sixth straight week, while Bitcoin BITSTAMP:BTCUSD Bears are already dreaming to enter a Bear Market, approaching a 20% decline from the highs of around $108,000 reached in December 2024.
The technical main graph is dedicated specifically to WTI oil futures (the contract following the expiring one), and supported by the averages of the 5- and 10-year SMA.
It points to the reversal of the disinflationary time span seen in the previous two and a half years, from mid-2022.
// Don't say "hop" , before you throned 😏
