Oil in 2025: How New Sanctions May Affect the Markets

Oil is the most important commodity in the world, with a direct impact on global economic growth. Any abrupt change in its price influences production costs, inflation, energy stocks, and various correlated sectors. In this article, we’ll examine how the new U.S. government sanctions against Russia may generate volatility in the oil market and affect other investments.

Why Is Oil So Important?

Global Economic Foundation: Oil is essential for transportation, industry, and energy.
Correlation with Growth: When the global economy heats up, the demand for oil tends to increase.
Chain Effects: A shock to oil supply or demand can trigger cost inflation, influencing stock markets, cryptocurrencies, and other commodities.

New Sanctions and Volatility

Recently, news about Biden administration sanctions on Russian oil and gas companies attracted the market’s attention. These restrictions could reduce oil supply, leading to:

Price Increases: With less oil available, the barrel’s price tends to rise.
Growth in the Energy Sector: Shares of companies linked to oil production and distribution can climb.
Higher Global Costs: If the barrel’s price skyrockets, the global economy faces increased transportation and production expenses.

The Risk of a Supply Shock

If Russian supply is drastically reduced, the barrel’s price may surge in a short time, impacting:

Inflation Indicators: Emerging countries like Brazil might feel the pressure faster.
Transport and Industrial Sectors: Production and distribution costs rise, affecting companies’ profit margins.
Consumption and Purchasing Power: With goods becoming more expensive, consumers’ budgets shrink.

The Oil Chart: A Long-Term Analysis

1. Monthly Chart

On monthly charts (in platforms like xStation or TradingView), we see:

Downtrend Line (DTL): Oil tends to respect this line at past highs. If it truly breaks above it (i.e., if a monthly candle closes beyond that line), it could open space for a significant rally.
Historical Averages: The barrel has previously surpassed US$100 in times of crisis. If the sanctions heavily restrict supply, oil could revisit—or exceed—these levels.

2. Weekly and Daily Charts

Key Fibonacci Levels: 38%, 61%, and 100% Fibonacci levels often mark important targets and pullbacks.
Breaking Resistance: Should the price close above a zone of congestion or a DTL, the next target is usually a higher Fibonacci projection (e.g., US$98, US$100, or US$120).
Amplified Volatility: As the main energy commodity, any relevant news can produce swift moves of 2% or 3% in a single session.

Relationship with Other Markets

Energy Stocks

Companies in the sector (especially in the U.S.) tend to benefit from a barrel price increase. The S&P 500 Energy Index has recently led gains when sanctions were announced.

Stock Exchanges

If oil rises too steeply, it could pressure inflation and production costs, thus reducing companies’ profit margins and possibly causing corrections in indices like the S&P 500. There’s no guaranteed linear correlation (oil up, stocks down), as many factors influence the market.

Cryptocurrencies

If energy costs rise, mining cryptocurrencies may become more expensive, and investors might rearrange their portfolios for protection or risk. There’s no consensus, however, on how cryptos will react long term.

Trading Oil: How It Works

Futures and Derivatives: You can trade oil futures (WTI and Brent) through brokers that offer these assets.
Energy Stocks: Invest in energy companies related to oil (exploration, refining, distribution).
CFDs (Contracts for Difference): Some traders use CFDs to leverage oil trades. This, however, requires special caution due to high risk.

Margin and Leverage

Oil is highly volatile and generally requires higher margins to cover market swings:

Watch Your Technical Stops: Sudden price moves can quickly trigger tight stops, especially on 1-minute or 5-minute charts.
Larger Positions on Daily or Weekly Charts: Adjusting the lot size may be necessary to handle fluctuations of US$5, US$10 or more per barrel.

Points to Note: News vs. Technical Analysis

While news and sanctions can spark many movements in the oil market, entry and exit decisions typically rely on:

Price Patterns: Bullish or bearish pivots, breakouts, and pullbacks.
Candle Closures: Especially on higher time frames, waiting for a monthly or weekly candle to close above a DTL can help avoid “Bull Traps” (false breakouts).
Indicators: Moving averages, Fibonacci projections, and support/resistance levels help define targets and risk limits.

Tip: News can alert you to potential volatility, but the trader decides when to enter the market based on chart or technical indicator signals.

Conclusion

The oil market in 2025—and in the months before—offers major opportunities as new sanctions and potential supply shocks emerge. However, given the enormous economic importance of this commodity, any sharp rise in the barrel’s price raises global costs and may trigger inflationary pressures and abrupt moves in other markets like equities and cryptocurrencies.

Next Steps:

Monitor the Downtrend Line (DTL) on the monthly or weekly chart.
Wait for Candle Closures on higher time frames to confirm significant breakouts.
Manage Your Risk: Adjust lot sizes and set proper stop orders.
Consider Simulators if you’re not yet confident about trading such a volatile market with real money.
Stay Informed, but rely on technical analysis to pinpoint entry and exit points.

If you want to explore short-term currency operations (Forex) and learn how technical analysis applies to the world’s largest financial market, check out the free Forex course. And don’t forget to subscribe to the channel to stay updated and help reach the 300k subscriber goal!

Good trading — and keep an eye on the barrel!

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