The oil market narrative for 2025 is undergoing a significant shift as new US sanctions targeting Russia's energy sector introduce fresh supply concerns. These measures, the most aggressive to date, impact Russian producers, insurers, and a substantial portion of the shadow tanker fleet, potentially disrupting up to 800,000 barrels per day of global supply. This development has prompted analysts to revisit their forecasts, with Goldman Sachs suggesting that Brent crude could surpass $90 per barrel if both Russian and Iranian outputs are affected, despite their base case of $76 a barrel for the year.
The tightening supply is further evidenced by a seven-week decline in US crude inventories, with stocks at the Cushing, Oklahoma hub reaching their lowest levels since 2014. This has led to a widening backwardation in futures markets, where near-term prices exceed those of longer-dated contracts, indicating short-term market tightness. The potential for increased enforcement of sanctions or escalating geopolitical tensions could further shift the bearish outlook, providing oil bulls with an opportunity to reclaim the narrative for the year.
As of 04:11 on January 13, Brent crude is trading at $81.48, up from its last close of $79.76. The market is closely watching upcoming reports from the IEA and OPEC, which may further influence price expectations if they address the impact of the sanctions.