Oil prices surged by about 5% on Thursday after the United States imposed fresh sanctions on major Russian oil producers Rosneft and Lukoil in response to Moscow’s ongoing war in Ukraine, extending gains from the previous trading session.
Brent crude futures rose $3.39, or 5.4%, to $65.98 a barrel at 1018 GMT, while U.S. West Texas Intermediate (WTI) crude climbed $3.31, or 5.7%, to $61.81.
According to Saxo Bank analyst Ole Hansen, the new U.S. measures could force refineries in China and India—key buyers of Russian crude—to seek alternative suppliers to avoid being cut off from the Western banking system.
Washington warned that further action could follow if Moscow fails to agree to an immediate ceasefire in Ukraine. The move comes a week after the U.K. sanctioned Rosneft and Lukoil, while the European Union approved its 19th sanctions package, including a ban on Russian LNG imports.
Following the announcement, prompt Brent crude futures moved into backwardation, with the first-month contract trading up to $1.98 higher than the six-month delivery contract.
The sanctions announcement coincided with a surprise drawdown in U.S. crude stockpiles, further boosting prices. However, analysts say the long-term impact on global supply will depend on how India responds and whether Russia secures new buyers.
India has been the largest importer of discounted Russian crude since the invasion of Ukraine, but industry sources said refiners—particularly Reliance Industries, the country’s top buyer—plan to sharply cut or halt such imports due to the new sanctions.
Still, some analysts remain cautious. “So far, almost all the sanctions against Russia over the past three and a half years have largely failed to dent the country’s oil production or revenues,” said Rystad Energy analyst Claudio Galimberti.
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Oversupply concerns following OPEC+ production hikes limited further gains, with UBS forecasting Brent prices to remain within the $60–$70 range. Meanwhile, U.S. inventories of crude oil, gasoline, and distillates fell last week as refinery activity and demand increased, according to the Energy Information Administration.
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Source:Africa Publicity
