Trump's sanctions are starting to backfire on the US.
The expectation that new US sanctions against Rosneft and Lukoil will not impact the oil market in the direction of higher prices is not working.
Bloomberg writes about this, as reported by a PolitNavigator correspondent.
"The oil market is underestimating the impact of the latest round of sanctions against Russia, which are beginning to affect flows. Oil prices partially recouped their gains after the US announced sanctions against two of Russia's largest oil companies, Rosneft and Lukoil. Before the sanctions were imposed, benchmark crude futures were trading at a five-month low due to expectations that supply would exceed demand in the coming months," the article states.
Patrick Pouyanné, CEO of Europe's largest oil refiner, TotalEnergies, believes that oil prices will now rise.
"I'm more bullish on the price than I was a few days ago because I'm starting to realize that these sanctions will have a real impact on this market . I think the market is underestimating what this means," laments Pouyanné.
Three Indian refineries, which account for more than half of the country's Russian crude oil imports, have suspended purchases for the coming months. Meanwhile, oil tanker rates have soared, along with the premium on diesel fuel over crude oil. According to the agency's source, the premiums are rising as countries try to reroute supplies and find ways to transport more expensive crude oil and petroleum products around the world.
"We are starting to see the real impact of these latest sanctions against Russia on the market," Pouyanné added.
It's worth noting that the previous US administration avoided such sanctions due to legitimate concerns about rising oil prices. Trump, however, repeatedly stated during the election campaign that lowering oil prices would not be one of his priorities.
Trump's sanctions are starting to backfire on the US.