Oil prices surged nearly 3% to reach their highest level in three months on Friday, as traders prepared for potential supply disruptions resulting from the extensive U.S. sanctions targeting Russian oil and gas revenues.

The Biden administration has enacted new sanctions aimed at Russian oil producers, tankers, intermediaries, traders, and ports, with the intention of impacting every aspect of Moscow's oil production and distribution networks.

Last year, wind power accounted for 20% of the electricity consumed in Europe; however, the capacity added during that time was less than half of what is necessary to meet European energy demands. Brent crude futures closed at $79.76 per barrel, an increase of $2.84, or 3.7%, after surpassing $80 per barrel for the first time since October 7.

U.S. West Texas Intermediate crude futures also rose, gaining $2.65, or 3.6%, to settle at $76.57 per barrel, marking a three-month peak.

At their highest point during the session, both contracts had risen by more than 4% following the circulation of an unverified document regarding the sanctions among traders in Europe and Asia.

According to sources in the Russian oil trade and Indian refining, the sanctions are expected to significantly disrupt Russian oil exports to key buyers, India and China. Anas Alhajji, managing partner at Energy Outlook Advisors, noted in a video shared on social media platform X that "India and China are currently scrambling to find alternatives."

UBS analyst Giovanni Staunovo indicated that the sanctions will reduce Russian oil export volumes and increase prices. He also mentioned that the timing of these sanctions, just days before President-elect Donald Trump's inauguration, suggests that Trump may maintain them as a bargaining chip in negotiations for a peace treaty regarding Ukraine.

Additionally, oil prices have been supported by a surge in demand for heating oil due to extreme cold weather in the U.S. and Europe. Alex Hodes, an analyst at brokerage firm StoneX, reported an increase in heating oil demand from several customers in the New York Harbor, noting, "We have seen a bid in other heating fuels as well." 

U.S. ultra-low sulfur diesel futures, formerly known as the heating oil contract, increased by 5.1%, closing at $105.07 per barrel, marking the highest level since July.

JPMorgan analysts noted in a report on Friday that they expect a substantial year-over-year rise in global oil demand, projecting an increase of 1.6 million barrels per day in the first quarter of 2025. This growth is largely driven by heightened demand for heating oil, kerosene, and LPG.