Oil surges 5% after US sanctions Russian firms Rosneft, Lukoil
Oil prices surged around 5% to a two-week high on Thursday after the U.S. imposed sanctions on major Russian suppliers Rosneft and Lukoil over Moscow's war in Ukraine, prompting energy firms in China and India to consider cutting Russian imports.
Brent futures rose $3.40, or 5.4%, to settle at $65.99 a barrel, while U.S. West Texas Intermediate (WTI) crude rose $3.29, or 5.6%, to settle at $61.79.
Those were the biggest daily percentage gains for both crude contracts since mid-June and their highest closes since October 8.
Russia was the world's second-biggest crude oil producer in 2024 after the U.S., according to U.S. energy data.
In addition to soaring crude prices, U.S. diesel futures jumped almost 7%, boosting the diesel crack spread to its highest since February 2024. Crack spreads measure refining profit margins.
The U.S. sanctions mean refineries in China and India, major buyers of Russian oil, will need to seek alternative suppliers to avoid exclusion from the Western banking system, said Saxo Bank analyst Ole Hansen.
Multiple trade sources told Reuters that Chinese state oil majors have suspended purchases of seaborne Russian oil from the two companies now under U.S. sanctions, providing a further boost to prices.
Kuwait's oil minister said that the Organization of the Petroleum Exporting Countries (OPEC) would be ready to offset any shortage in the market by rolling back output cuts.
Russian President Vladimir Putin, however, said it will take time for the global market to replace Russian oil.
"This is, of course, an attempt to put pressure on Russia," Putin added. "But no self-respecting country and no self-respecting people ever decides anything under pressure.
The U.S. said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Ukraine.
Source : Reuters.com
