Oil prices paused their rally on Tuesday but held near four-month highs as markets assessed the impact of new U.S. sanctions on Russian oil exports to key buyers India and China.
Brent crude futures slipped 0.67% to $80.47 per barrel by 1033 GMT, while U.S. West Texas Intermediate (WTI) crude fell 0.67% to $78.29 per barrel.
The gains follow a 2% surge on Monday after the U.S. Treasury imposed sanctions targeting Russian oil companies Gazprom Neft and Surgutneftegas, along with 183 tankers from Russia’s “shadow fleet.” The sanctions aim to curb Russia’s ability to sell oil under restricted conditions.
Market attention is now on U.S. inflation data, with the producer price index (PPI) due Tuesday and the consumer price index (CPI) on Wednesday. A higher-than-expected core inflation reading could reduce the likelihood of additional Federal Reserve rate cuts, which typically boost economic activity and oil demand.
While the sanctions are expected to significantly tighten Russian oil supply, analysts predict the impact on the physical market may be limited compared to initial estimates. Additionally, uncertainty over demand from China, a major crude importer, could offset supply concerns.
China’s crude oil imports declined in 2024 for the first time in two decades outside the COVID-19 pandemic, according to official data released Monday, raising questions about the global demand outlook.
