As traders braced for tighter markets, oil prices surged to a three-month high last week as the Biden administration imposed its most targeted sanctions to yet against the Russian oil industry.

The latest penalties, which target tankers transporting Russian crude, will offer the incoming Donald Trump administration even more negotiating power with Russia, particularly in relation to a ceasefire in Ukraine, according to JPMorgan analysts.

However, JPM analysts also pointed out that Trump is probably going to follow Biden in keeping oil prices low in order to control inflation, which portends a limited increase in crude prices.

Following sanctions issued by the U.S. Treasury on Friday on Russian oil companies Gazprom (MCX:GAZP) and Surgutneftegas, as well as 183 vessels that transport Russian crude, oil prices surged to a three-month high.

With oil serving as a significant source of income for Russia's protracted war with Ukraine, the action aims to further isolate Moscow from global markets.

China and India's oil importers will have to look for alternative sources of crude due to the new sanctions.

According to JPM analysts, Trump would probably leverage talks with Moscow by threatening to withdraw U.S. sanctions against Russia.

Last week, the president-elect extended his campaign promise to put an end to the conflict between Russia and Ukraine by six months, and Moscow confirmed that the two countries were getting ready for a potential summit.

With oil serving as a significant source of income for Russia's protracted war with Ukraine, the action aims to further isolate Moscow from global markets.

China and India's oil importers will have to look for alternative sources of crude due to the new sanctions.

According to JPM analysts, Trump would probably leverage talks with Moscow by threatening to withdraw U.S. sanctions against Russia.

Last week, the president-elect extended his campaign promise to put an end to the conflict between Russia and Ukraine by six months, and Moscow confirmed that the two countries were getting ready for a potential summit.

The Biden administration’s approach of limiting Russian oil production while maintaining global oil flows was a key part of bringing down inflation substantially since 2022, although other underlying factors have kept inflation sticky in recent months.