Global crude oil prices surged over 2% on Thursday following US President Donald Trump’s announcement of imposing significant sanctions on two major Russian oil companies, Rosneft and Lukoil Oil. The move, coupled with rumors of potential curbs on software exports to China, led to a downturn in stock markets worldwide.
The decision to impose sanctions comes after failed plans for a fresh summit between Trump and Russian counterpart Vladimir Putin in Budapest. Trump expressed frustration with the lack of progress in peace efforts with Ukraine, stating that conversations with Putin are positive but “don’t go anywhere.” He hopes the sanctions will be short-lived and that the conflict will be resolved.
In response to the news, Brent and West Texas Intermediate (WTI) crude oil prices climbed nearly 3%, reaching a near two-week high. This increase was also influenced by claims that India has agreed to reduce its Russian oil purchases as part of a US trade deal, although New Delhi has not confirmed this.
Concurrently, equity markets suffered losses, with major Asian markets, including Tokyo, Hong Kong, and Shanghai, experiencing declines. This downturn is attributed to lingering concerns about a potential end to the tech-led surge in record highs this year and warnings of a possible bubble forming.
Gold prices also experienced a slight rebound, rising about 1% to $4,075 after losses in the previous two days. The uncertainty surrounding US-China trade relations continues, with investors keeping a close eye on the potential meeting between Trump and Chinese counterpart at the APEC summit in South Korea.
US Treasury Secretary Scott Bessent hinted at possible limits on software exports to China, stating that “everything is on the table.” The consideration of export controls has contributed to worries about a potential escalation of the trade war between the US and China.
Analysts remain cautious, with some expressing concerns that the market may be underestimating the risk of a strong response from either side. The ongoing developments in US-Russia and US-China relations are likely to continue influencing global markets in the coming days. Key figures at 0230 GMT showed declines in major Asian markets, with the Nikkei 225 down 1.3%, the Hang Seng Index down 0.6%, and the Shanghai Composite down 0.9%.
In the energy sector, West Texas Intermediate crude rose 2.3% to $59.85 per barrel, while Brent North Sea Crude increased 2.3% to $64.05 per barrel. The Dow Jones Industrial Average closed down 0.7% at 45,590.41, while the London FTSE 100 ended up 0.9% at 9,515.00. As global markets continue to respond to shifting geopolitical tensions, investors remain vigilant, anticipating further developments in international trade relations.