Oil jumps more than 4% on concern over more sanctions on Russia

Oil prices rallied more than 4% on Friday to reach their highest levels since October as traders focused on potential supply disruptions from more sanctions on Russia.

Brent crude futures gained $3.50, or 4.6%, to $80.42 a barrel by 1422 GMT, reaching $80 a barrel for the first time since Oct.7. U.S. West Texas Intermediate crude futures advanced $3.57, or 4.8%, to $77.49.

The United States will impose some of the harshest sanctions on the Russian oil industry to date, designating 180 vessels, dozens of traders, two major oil companies and some top Russian oil executives, a document seen by Reuters said.

The document, purported to be from the U.S. Treasury, was being circulated among traders in Europe and Asia. Reuters could not verify the veracity of the document.

Ahead of U.S. President-elect Donald Trump's inauguration on Jan. 20, expectations have been mounting that President Joe Biden's administration will tighten sanctions against Russia and Iran, at a time when oil stockpiles remain low.

“That would be the farewell gift of the Biden administration,” said PVM analyst Tamas Varga. Existing and possible further sanctions, as well as market expectations of draws on fuel inventories because of cold weather, are driving prices higher, he added.

The U.S. weather bureau expects central and eastern parts of the country to experience below-average temperatures. Many regions in Europe have also been hit by extreme cold and are likely to continue to experience a chillier than usual start to the year.