U.S. Sanctions on Russia and Iran: Impact on Global Oil Markets

U.S. sanctions on Russia and Iran may disrupt oil supply chains. Despite this, the International Energy Agency (IEA) predicts a global market surplus due to supply growth from non-OPEC+ countries. Oil prices rose, influenced by sanctions and global factors. The IEA refrains from adjusting forecasts until impacts are clearer.

The latest U.S. sanctions targeting Russia and Iran could significantly impact oil supply chains, potentially tightening global markets, according to the International Energy Agency (IEA). However, the IEA still forecasts a surplus in the global oil market this year, given supply growth led by non-OPEC+ countries outpacing muted demand increases.

The newly imposed sanctions affect entities responsible for handling a substantial portion of Russian and Iranian crude exports. Despite this, the IEA is cautious about altering its supply forecasts until the full impact of these measures becomes evident. This caution reflects a more measured approach compared to the IEA's predictions back in March 2022.

Oil prices have reacted to these developments, with Brent crude rising to about $81 a barrel. Factors such as a cold northern hemisphere snap and the ability of non-OPEC+ countries to boost supply could mitigate price increases. Meanwhile, U.S. sanctions are expected to give diplomatic leverage in addressing the Ukraine conflict.

(With inputs from agencies.)