Oil prices soar after US sanctions on Russia: What it means for global market
Photo: Oil prices soared after US sanctions (Getty Images)
Oil prices rose sharply after the introduction of new US sanctions against Russian companies Rosneft and Lukoil. Markets are reacting to increased pressure from Washington, Reuters reports.
Brent crude futures rose $3.39, or 5.4%, to $65.98 per barrel at 10:18 GMT, while West Texas Intermediate crude futures rose $3.31, or 5.7%, to $61.81.
According to Saxo Bank analyst Ole Hansen, US sanctions mean that refineries in China and India, the main buyers of Russian oil, will have to look for alternative suppliers to avoid being excluded from the Western banking system.
The US has said it is prepared to take further action, calling on Moscow to immediately agree to a ceasefire in Ukraine.
Last week, the UK imposed sanctions on Rosneft and Lukoil, and EU countries approved a 19th package of sanctions against Russia, which includes a ban on imports of Russian LNG.
Brent crude futures quickly moved into backwardation, with the front-month Brent contract trading $1.98 higher than the contract for delivery in six months.
Immediately after the US sanctions were announced, Brent and WTI futures rose by more than $2 per barrel, helped by an unexpected decline in US inventories.
The impact of the sanctions on oil markets will depend on how India responds and whether Russia finds alternative buyers, said UBS analyst Giovanni Staunovo.
India has become the largest buyer of Russian crude oil at a discount since Moscow launched its war in Ukraine. According to the agency, Indian refineries are likely to sharply reduce imports of Russian oil due to new sanctions.
Reliance Industries, a private company and India's main buyer of Russian crude oil, plans to reduce or completely stop such imports, according to two sources familiar with the matter.
However, there remains some skepticism in the market as to whether US sanctions will lead to a fundamental shift in supply and demand.
The US has imposed tough sanctions on Russian oil companies Rosneft and Lukoil.
After the sanctions were imposed, Brent crude oil futures rose 3% to $64.5 per barrel. Oil is currently significantly cheaper than it was for most of 2025.
Against this backdrop, India will almost completely abandon Russian oil after the US sanctions.
Russian oil flows to India, which rose sharply after Russia invaded Ukraine, will soon be reduced to almost zero.
