Oil markets saw a significant surge on Thursday as the United States announced sanctions targeting two of Russia’s largest oil companies, Rosneft and Lukoil, over the ongoing war in Ukraine. The move marks a new phase in Western economic pressure on Moscow, extending the market’s upward momentum from the previous session.
Brent crude futures rose sharply by $2.99, or 4.8%, settling at $65.58 per barrel at 1:30 p.m. GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude climbed $2.93, or 5%, to $61.43 per barrel. The jump in oil prices came immediately after the sanctions were announced, highlighting the market’s sensitivity to geopolitical tensions and supply disruptions.
According to multiple trade sources, Chinese state-owned oil companies have already suspended purchases of Russian seaborne oil from Rosneft and Lukoil. This sudden halt from one of the world’s largest buyers added additional upward pressure on prices. Analysts point out that Chinese and Indian refineries, which have been major buyers of discounted Russian crude since the start of the Ukraine conflict, will now face challenges in securing alternative sources without risking exclusion from the Western banking system.
“The sanctions effectively force major refiners in Asia to reassess their supply chains,” said Ole Hansen, an analyst at Saxo Bank. “It’s a clear signal from Washington that further steps could follow if Moscow does not agree to an immediate ceasefire in Ukraine.”
The U.S. move follows similar sanctions from Britain last week, which also targeted Rosneft and Lukoil. In addition, the European Union has approved its 19th package of sanctions against Russia, including a ban on imports of Russian liquefied natural gas (LNG). Together, these measures indicate an intensifying Western effort to cut Russia off from critical energy revenues.
Despite the immediate price surge, gains were partially tempered by comments from Kuwait’s oil minister, who indicated that OPEC is prepared to step in and offset potential shortages by rolling back output cuts. This reassurance mitigated some market concerns about a sustained disruption in global supply.
Brent crude futures also switched to backwardation, with the first-month contract trading nearly $2 above the six-month contract. This structure reflects the market’s heightened concern over short-term supply tightness.
In the United States, the Energy Information Administration reported that crude, gasoline, and distillate inventories fell last week, driven by robust refining activity and growing demand. The combination of geopolitical tension and tightening inventories contributed to the market’s upward move.
Market analysts remain cautious, noting that the actual impact of sanctions will depend heavily on how India responds and whether Russia can secure alternative buyers. India emerged as the largest buyer of discounted Russian crude following Moscow’s invasion of Ukraine, but industry sources indicate that major Indian refiners, including Reliance Industries, may sharply curtail or even halt imports of Russian oil under the new U.S. sanctions.
“India’s reaction is crucial,” said Giovanni Staunovo, an analyst at UBS. “If they step back from Russian crude, we could see a more pronounced supply squeeze in the global market.”
Despite these concerns, some experts remain skeptical about the long-term effect of sanctions on Russian oil production. Claudio Galimberti of Rystad Energy noted, “Almost all sanctions against Russia over the past three and a half years have largely failed to reduce either production volumes or oil revenues. We’ll need to see whether this latest round achieves anything different.”
Oversupply concerns, stemming from recent OPEC+ production increases, capped further gains in crude prices. UBS expects Brent to remain within a $60–$70 range in the near term, balancing geopolitical risks against ongoing production adjustments.
For American consumers and businesses, the immediate impact could be seen in higher gasoline prices at the pump and increased costs for refined products. Energy markets are likely to remain volatile in the coming weeks as traders monitor geopolitical developments, inventory data, and OPEC+ decisions.
The U.S. administration has made it clear that it is prepared to take additional actions if necessary, reinforcing its strategy of using economic measures to pressure Moscow into negotiations. Meanwhile, global markets are adjusting to a landscape where supply uncertainties, shifting alliances, and the ongoing Ukraine conflict continue to reshape the energy sector.
In summary, the U.S. sanctions on Rosneft and Lukoil have injected fresh volatility into global oil markets, prompting immediate price gains, raising concerns over Asian supply, and highlighting the critical role of India’s response. While short-term effects are evident, analysts caution that the broader impact on Russian oil production and revenue remains uncertain.
Tags: US sanctions, Russian oil, Rosneft, Lukoil, Brent crude, WTI crude, OPEC+, global oil market, India oil imports, Ukraine war, energy prices