Oil markets shot higher Thursday after the U.S. imposed new sanctions on major Russian oil companies, triggering fresh concerns about global supply disruptions.
Key Market Moves
- Brent crude futures climbed by about 4.3%, reaching $65.30 per barrel at 0841 GMT.
- U.S. West Texas Intermediate (WTI) rose approximately 4.4%, trading around $61.06 per barrel.
- The sanctions target Rosneft and Lukoil, Russia’s two largest oil producers, freezing their U.S. assets and barring American firms from business dealings.
- These companies are key to Russia’s oil export chain, any curtailment in their output or trade could significantly tighten global supply. Analysts say India’s state refiners are already reviewing their oil purchases from Russia in response to the sanctions.
Why This Matters
The rally comes amid growing geopolitical risks. The U.S. Treasury emphasized the sanctions aim to “degrade” Russia’s war-funding capabilities amid its conflict in Ukraine.
Oil markets interpreted the move as a signal of potential longer-term disruption in crude supply, especially if large buyers such as China or India reduce imports from sanctioned firms.
Outlook & Risks
While the price uptick was strong, some analysts remain cautious. Questions linger over whether Russia can shift crude exports to non-Western buyers and whether the sanctions will meaningfully curtail volumes.
Extra pressure: a surprise inventory drop in U.S. crude last week added fuel to the rally.
The real test will come if refiners and consumers enact substantial changes to purchasing patterns, and if new supplies from other regions can fill any void. Until then, oil remains in a risk-on posture.
