Advisers to US President-elect Donald Trump are considering oil sanctions as a key instrument to help seal the Ukraine peace deal, Bloomberg reported on Thursday, citing “people familiar with the matter.”
The plan consists of two main approaches: good faith measures to benefit Russian oil producers if a peace deal is on the horizon, or harder sanctions as leverage to pressure Moscow into negotiating, the source alleged.
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Scott Bessent, Trump’s nominee for Treasury secretary, advocated for more sanctions as an instrument to help end the war in Ukraine during Thursday’s Senate committee hearing.
“I think if any officials in the Russian Federation are watching this confirmation hearing, they should know that if I’m confirmed, and if President Trump requests as part of his strategy to end the Ukraine war, that I will be 100% on board with taking sanctions up – especially on the Russian oil majors – to levels that would bring the Russian Federation to the table,” Bessent said.
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Bessent added that the Biden administration’s alleged concerns for rising energy prices during an election season were to blame for the sanctions being “not fulsome enough.”
The developments followed US President Joe Biden’s sweeping sanctions on Russia’s oil industry during the last days of his presidency, which Bloomberg described as “disruptive.”
Oil market disruptions after Biden’s sanctions
On Friday, Jan. 17, oil prices continued to rise for the fourth consecutive week, with the market bracing for oil market disruptions after Biden’s sanctions, Reuters reported.
Brent crude futures rose $0.3, or 0.4%, to $81.59 per barrel by 9:23 a.m. Greenwich Mean Time (GMT), gaining 2.3% this week. Meanwhile, US West Texas Intermediate crude futures increased $0.41, or 0.5%, to $79.09 per barrel, up 3.3% for the week.
Toshitaka Tazawa, an analyst at Fujitomi Securities, told Reuters that potential US interest rate cuts and rising demand for kerosene due to cold weather in the US could’ve been a factor as well.
“Supply concerns from US sanctions on Russian oil producers and tankers, combined with expectations of a demand recovery driven by potential US interest rate cuts, are bolstering the crude market,” said Tazawa.
“The anticipated increase in kerosene demand due to cold weather in the United States is another supportive factor,” Tazawa added.
Investors are also waiting to see if there will be more supply disruptions once Trump assumes office, with Trump expected to take a tough stance on Iran and Venezuela, according to Reuters.
The Kremlin has signaled openness to talk to Trump, with the latter saying that a meeting was being arranged.
Trump has boasted during his campaign of being able to end the war “in 24 hours” after assuming office, though his Ukraine envoy pick, Keith Kellogg, set a “personal and professional” goal of “100 days,” hinting at a more lengthy duration than what Trump initially promised.
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