Oil prices climbed sharply on Thursday, rising more than 4%, after the United States imposed fresh sanctions on Russia’s top oil companies, Rosneft and Lukoil, over the ongoing war in Ukraine.
The move sparked fears of tighter global supply as Asian refiners review their Russian crude purchases.
By 0841 GMT, Brent crude futures were up $2.71 (4.3%) at $65.30 per barrel, while U.S. West Texas Intermediate (WTI) gained $2.56 (4.4%) to reach $61.06.
Analysts said the sanctions drove immediate price gains as traders reacted to the prospect of restricted Russian oil exports. “Refineries in China and India will now need to seek alternative suppliers to avoid exclusion from the Western banking system,” said Ole Hansen, a commodities analyst at Saxo Bank.
US sanctions target Moscow’s energy revenues
The U.S. Treasury announced new penalties on Rosneft and Lukoil as part of Washington’s broader effort to pressure Moscow into ending its war in Ukraine. The administration also warned it was ready to take further action if Russia fails to agree to a ceasefire.
The latest measures follow Britain’s sanctions on the same companies last week and coincide with the European Union’s 19th sanctions package, which includes a ban on Russian liquefied natural gas (LNG) imports.
India Reviewing Russian Oil Purchases
The sanctions could have a ripple effect across Asia’s energy markets, particularly in India, which has become the largest buyer of discounted Russian crude since 2022.
Indian refiners, including Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), are reviewing their supply documentation to ensure compliance with the new U.S. restrictions.
Sources said Reliance Industries, India’s top private refiner, is considering reducing or halting Russian oil imports entirely to avoid exposure to secondary sanctions.
“The impact on global markets will depend largely on how India reacts and whether Russia can find new buyers,” said Giovanni Staunovo, analyst at UBS.
Skepticism over long-term market impact
Despite the sharp price jump, some analysts remain cautious about lasting effects. Claudio Galimberti, global market analysis director at Rystad Energy, said, “Almost all sanctions against Russia over the past 3.5 years have failed to dent its oil output or revenues.”
He added that while the new measures could briefly disrupt trade flows, Russia’s crude volumes have remained resilient due to demand from alternative markets like China and the Middle East.
Adding momentum to Thursday’s rally, the U.S. Energy Information Administration (EIA) reported a drop in crude, gasoline, and distillate inventories last week amid strong refining activity and demand.
However, global prices have trended lower over the past month, pressured by OPEC+ production increases and fears of oversupply. The sanctions-driven rebound, analysts say, may prove temporary if Russian oil continues flowing through indirect routes.
