Oil prices jumped as the US imposed sweeping sanctions against Russia’s oil industry

Oil prices jumped on Friday as the US Treasury Department announced broad sanctions against Russia’s oil industry.

Brent By 11:12 a.m. ET, prices were up $1.92, or 2.5%, at $78.84 a barrel. US crude oil rose by $1.89, or 2.56%, to $75.81 per barrel. Earlier in the day, Brent broke above $80 a barrel for the first time since October, hitting a session high of $80.75.

Russian oil companies Gazprom Nafta and Surgutneftegaz and their subsidiaries, more than 180 tankers and more than a dozen Russian officials and energy managers are affected by the sanctions. The CEO of Gazprom Nafta Alyaksandr Valerievich Dyukov is among the managers who have been sanctioned.

The vessels that have come under sanctions are mostly oil tankers that are part of Russia’s “shadow fleet” that has evaded existing sanctions on the country’s energy exports, according to the Ministry of Finance.

“The United States is taking radical action against Russia’s main source of revenue to fund its brutal and illegal war against Ukraine,” Treasury Secretary Janet Yellen said.

“With today’s actions, we are increasing the sanctions risk associated with the trade in oil from Russia, including facilitating transportation and financing in support of oil exports from Russia,” Yelen said.

The perception in the oil market is that Indian and Chinese refiners, which have been importing Russian crude, will have to compete for barrels from the Middle East, Bob Yauger, executive director of energy futures at Mizuho Securities, said in a note to clients on Friday.

The Biden administration has sought to increase pressure on Russia and aid Ukraine before President-elect Donald Trump takes office.

“The Biden administration has chosen to impose tougher energy sanctions, which has particularly pleased the oil market regarding the risks of sanctions,” said Bob McNally, president of Rapidan Energy Group.

“So we expect today’s substantial risk premium in Brent to lead to the expected signals from the Trump team on whether they will continue with these sanctions,” McNally said.