Oil Prices Surge as US Hits Russia with News Sanctions
In the global commodity market, oil prices surged over 2% during early trading hours on Thursday amid mounting supply concerns following US sanctions on Russia’s two largest oil companies, Rosneft and Lukoil.
Brent crude was trading at $64.29 per barrel, up 2.12% from the previous close of $62.95. US benchmark West Texas Intermediate (WTI) also rose 2.3% to $60.53, compared to $59.15 in the prior session.
US included Rosneft, Lukoil, and dozens of their affiliates on its sanctions list, citing “a serious lack of commitment” by Moscow to advancing peace talks aimed at ending the war in Ukraine.
US Treasury Department said the sanctions aim to tighten pressure on Russia’s energy sector and limit “Kremlin’s ability to raise revenue for its war machine and support its weakened economy,”
In a statement, the department reaffirmed its commitment to using all available tools to support the peace process, stressing that “US will continue to advocate for a peaceful resolution to the war, and a permanent peace depends entirely on Russia’s willingness to negotiate in good faith.”
Sanctions target Lukoil subsidiaries including Perm, Aik, Kaliningradmorneft, West Siberia, Uraloil, and the Russian Innovation Fuel and Energy Company, which are engaged in oil and gas exploration, production, and technology development.
About 30 Rosneft subsidiaries, such as Bashneft Dobycha, Vankorneft, Samaraneftegaz, RN Tuapse Oil Refinery, Orenburgneft, Yuganskneftegaz, and Ryazan Oil Refinery, were also blacklisted for their involvement in crude production, refining, and natural gas development across Russia.
According to the US Treasury’s Office of Foreign Assets Control (OFAC), all assets of these entities under US jurisdiction, or controlled by US citizens, have been frozen.
Additionally, any company owned 50% or more, directly or indirectly, by sanctioned entities automatically falls under the sanctions. US persons and institutions are prohibited from conducting any financial transactions with these assets.
OFAC emphasized that the goal of the sanctions is not punitive but to encourage a change in Russia’s behavior.
Analysts warn that the move could disrupt global oil flows, increasing the risk of supply interruptions from Russia and prompting buyers to turn to the open market.
If India, under US pressure, reduces its purchases of Russian oil, demand in Asia could shift toward US crude, potentially pushing Atlantic basin prices higher.
Indian state refiners said they are reviewing procurement arrangements to ensure they are not directly sourcing from Rosneft or Lukoil.
Also, data from the US Energy Information Administration (EIA) showed higher demand in the world’s largest oil consumer, further supporting price gains.
Commercial crude inventories in the US fell by 1 million barrels to 422.8 million barrels last week, well above market expectations for a 2.2 million barrel increase.
Gasoline inventories also declined, falling 2.1 million barrels to 216.7 million.
EIA data showed that US average crude oil production edged down by 7,000 barrels per day (bpd) to around 13.62 million bpd during the same week. The decline in production reinforced supply concerns and lent additional support to prices. Lafarge Africa Grows Profit by 246%, Retains Positive Outlook
