Sanctions have a far greater impact on Russian oil flows than tariffs: Energy Aspects' Amrita Sen

Core Viewpoint - The recent rally in the oil sector is primarily driven by significant sanctions imposed by the US on major Russian oil producers, which could potentially lead to a loss of 1.5 to 2.5 million barrels per day in oil supply [2][4]. Group 1: Sanctions Impact - The sanctions announced are the most meaningful since the onset of the war, leading to a notable increase in oil prices from below $58 to approximately $62.37 per barrel [1][2]. - If the sanctions are fully enforced, the price of oil could rise significantly, potentially reaching the $80 range, depending on the actual volume of oil lost [5][8]. - The market remains skeptical about the enforcement of these sanctions, as previous sanctions have not been effectively implemented [3][4]. Group 2: Market Reactions - There is a belief that workarounds will be found, which may mitigate the impact of the sanctions on oil supply in the long term [5][6]. - Despite the current price increase, traders are cautious and do not expect the rally to last, citing an oversupplied market projected for 2026 [16][17]. - The skepticism in the market is reflected in traders' attitudes, who are not fully convinced that the price rally will be sustained [15][16]. Group 3: Global Dynamics - The enforcement of sanctions is crucial, as companies in countries like India and China may have significant US business ties that discourage them from circumventing these sanctions [11][12]. - The EU's coordinated response to the sanctions indicates a collective effort, although there are concerns about the impact on energy prices within Europe [13][14]. - The US administration's stance on low oil prices contrasts with the potential for higher energy costs resulting from these sanctions, contributing to market skepticism [15].