Oil Prices Surge Over 4% Following New US Sanctions on Russia: What You Need to Know

LONDON, Oct 23 (Reuters) – Oil prices jumped more than 4% recently. This increase follows new U.S. sanctions targeting major Russian oil suppliers, Rosneft and Lukoil. The sanctions come as a response to the ongoing war in Ukraine.

Brent crude futures surged by $2.71, reaching $65.30 a barrel. U.S. West Texas Intermediate crude also saw a rise, up $2.56 to $61.06.

Analyst Ole Hansen from Saxo Bank notes that the sanctions will force refineries in China and India to find new suppliers. This shift could significantly impact the oil market, especially as India has been a major buyer of Russian crude following the war’s start in 2022.

The U.S. has indicated it may impose more actions if Russia doesn’t agree to a ceasefire. These sanctions follow similar measures by the UK and the EU, which last week approved a 19th package targeting Russia, including banning imports of Russian LNG.

Despite the recent price boost, some market analysts remain skeptical about long-term effects. Giovanni Staunovo from UBS commented that the real impact would depend on how India reacts and whether Russia can find alternative buyers.

India’s refiners are already reassessing their Russian oil purchases. Reliance Industries, India’s largest buyer of Russian crude, may significantly reduce or even stop these imports, according to insiders.

While the sanctions are meant to restrict oil supply, some experts argue they haven’t fundamentally changed Russia’s production or revenues. Claudio Galimberti from Rystad Energy highlights that previous sanctions over the past few years have not significantly harmed Russia’s oil output.

Interestingly, oil prices had recently declined due to oversupply concerns stemming from increased OPEC+ production. Meanwhile, U.S. crude oil, gasoline, and distillate stockpiles have fallen, showing rising demand in the country.

This situation underscores the complex dynamics of global oil supply and geopolitics. As countries adjust to sanctions, the oil market could see further fluctuations in the coming weeks.



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