Oil prices have surged following the US announcement of sanctions on Russian oil majors Rosneft and Lukoil. Global benchmark Brent crude futures jumped over 5% to $65.99 a barrel, while US West Texas Intermediate (WTI) rose 5.6% to $61.79 on Thursday. Despite a slight dip in early trading on Friday, both benchmarks are on track for a 7% weekly gain, the biggest since early June.
The White House described the latest sanctions as a step to encourage Moscow to agree to a ceasefire. However, Russia remains open to diplomacy but insists that any peace deal must address the conflict’s root causes. Russian officials have accused Kiev and its Western backers of refusing to negotiate in good faith and undermining peace efforts through sanctions.
The sanctions have prompted Chinese state oil majors to pause short-term Russian seaborne crude purchases, according to media reports citing trade sources. Industry sources have also warned that refiners in India, the largest buyer of seaborne Russian oil, and Türkiye, the third largest, could reduce imports in the coming weeks. Janiv Shah, vice president of oil markets analysis at Rystad Energy, noted that “flows to India are at risk in particular… challenges to Chinese refiners would be more muted, considering the diversification of crude sources and stock availability.”
The measures are expected to have a ripple effect on the market as buyers of Russian crude seek alternatives until there is clarity on enforcement. Richard Bronze, head of geopolitics at Energy Aspects, predicted that Brent could approach $70 a barrel in the coming days, stating that “just the decision to make this announcement is going to send quite a shock wave through the market.”
Russian President Vladimir Putin has called the new sanctions an “unfriendly move” but stated that they would not significantly impact Russia’s economy. He emphasized that the sanctions were another attempt by Washington to pressure Moscow, stressing that “no self-respecting country ever does anything under pressure.” The development is likely to have significant implications for the global oil market and diplomatic relations between Russia and the West.