Home / Business and Economy / Sanctions Squeeze Global Oil Supply, Prices Surge
Sanctions Squeeze Global Oil Supply, Prices Surge
12 Feb
Summary
- Sanctions on Russian and Iranian oil create competition for other supplies.
- Millions of barrels of sanctioned crude remain unsold on the seas.
- Global oil inventories grew significantly in the past year.
Global crude oil prices have experienced a notable surge in the current year, largely attributed to major refiners avoiding oil from sanctioned nations. The CEO of Vitol Group, a leading independent oil trader, stated that increased restrictions on Russian and Iranian oil have escalated competition for Western and Saudi crude supplies.
This shift means that approximately one million barrels of oil per day, typically sourced from these sanctioned countries, are now unsold and remain on the high seas. Consequently, buyers are seeking alternative crude grades, which is tightening the market and contributing to the rise in global prices. Ship-tracking data indicates over 290 million barrels of Russian and Iranian crude are currently afloat, a substantial increase from the previous year.
The International Energy Agency had previously warned of a significant oversupply in the global market for the current year. However, this anticipated surplus has not materialized in price trends. In fact, data from the agency revealed that global oil inventories expanded at their fastest rate since 2020 throughout the past year.
