U.S. Pump Prices Could Soon Spike After Fresh Sanctions On Russian Oil
Alex Kimani

Previously, we reported that the national average price of gasoline in the United States has dropped below $3 a gallon for the first time in years, in large part due to OPEC+ returning more barrels to the market as well as weak global demand. Average national gas prices clocked in at $2.969 per gallon on Monday, 16 cents lower than a year ago, with popular fuel savings platform GasBuddy predicting that they could go even lower in the coming weeks. 

Warnings on Friday that U.S. motorists may not enjoy sub-$3 prices for long became reality by the weekend, with average pump prices back up to $3.07 by Sunday, according to AAA, following a new round of U.S. tariffs on Russian oil. 

Brent crude for December delivery was trading at $66.42 per barrel at 12 pm ET on Friday, a nearly 10% jump from Monday’s intraday low of $60.5 per barrel while the corresponding WTI crude contract was changing hands at $61.94 per barrel from last Monday’s low at $57.00 per barrel. By Sunday, Brent was holding steady just under $66/barrel.

Washington announced on Wednesday fresh sanctions targeting Russia’s energy giants, Rosneft and Lukoil, and their subsidiaries, just days after the UK unveiled similar sanctions against the companies. “Given President Putin’s refusal to end this senseless war, Treasury is sanctioning Russia’s two largest oil companies that fund the Kremlin’s war machine. Treasury is prepared to take further action if necessary to support President Trump’s effort to end yet another war. We encourage our allies to join us in and adhere to these sanctions,” said Secretary of the Treasury Scott Bessent.

The development marks a sudden departure by the Trump administration from its previous modus operandi, whereby Washington tried to act as a somewhat neutral mediator between Ukraine and Russia. Trump had repeatedly threatened tough measures against Moscow, but had failed to act until now in the hope of brokering a peace deal. And now Patrick De Haan, head of petroleum analysis at GasBuddy, is warning consumers to brace for higher prices at the pump in a matter of days.

“We’ll probably start to see motorists be impacted by the sanctions at the pump in the next couple days and it might take five days for that to be fully passed along,” De Haan said, adding that the oil price rally might reverse depending on whether Russia or the U.S. change positions.“Russia will feel pressure to come to the table in light of the new developments or President Trump may react when he sees oil prices rising to levels that become uncomfortable, so I don’t think this is going to be very long lasting,” he added.

Downward Pressure On Oil Prices

Thankfully for U.S. motorists, higher oil prices are not likely to last for long, with downward pressure on oil prices likely to resume. Commodity analysts at Standard Chartered have finally joined the bear camp, slashing the 2026 and 2027 oil price forecast by $15 per barrel, triggered by the significant rotation in the forward curve seen over the past year. StanChart has raised the average price of Brent crude in 2025 to $68.50/bbl from $61/bbl; however, the analysts have cut the 2026 target to $63.50/bbl from $78/bbl, and 2027 prices to $67/bbl from $83/bbl, noting that the futures curve is now in contango from early-2026 onwards. Contango occurs when the futures price is higher than the spot price, suggesting that people expect the price to rise or that storage costs are high, while backwardation occurs when the futures price is lower than the spot price, often indicating high immediate demand or expectations of a future price drop. 

StanChart’s latest revisions reflect near-term weakness, followed by a long-term steady but gradual increase. The commodity experts are now predicting near-term softness, reflected in overwhelmingly negative sentiment, driven by trade war and tariff uncertainty and oversupply fears. However, they have maintained their earlier prediction that low prices will start to depress U.S. shale output growth, and if OPEC+’s return of barrels is sustained, this will highlight tightness and the geographic concentration of spare capacity, which should be supportive in the medium term.

StanChart’s forecast of looming output cuts by U.S. producers is supported by the fact that U.S. shale production costs have been rising, driven by the depletion of prime resources and the need to drill in more speculative, complex areas and formations. Analysts at Enverus have predicted that the marginal cost to produce oil in the U.S. Shale Patch could increase from ~$70 per barrel to $95 per barrel by the mid-2030s. This shift is happening as the industry moves from easily accessible core inventory to less proven resources, leading to higher costs. 

By Alex Kimani for Oilprice.com

 

 

 

 

 

Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com. 

 

 

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