Oil prices advanced sharply on Thursday, extending the previous session’s rally, after India signaled it may scale back purchases of Russian oil in response to fresh U.S. sanctions on Rosneft and Lukoil.
By 06:14 GMT, Brent crude was up $2.12, or 3.4%, at $64.71 a barrel, while U.S. West Texas Intermediate climbed $2.09, or 3.6%, to $60.59.
Washington said it was ready to escalate measures against Moscow and urged it to “agree immediately to a ceasefire” in Ukraine. The U.K. sanctioned Rosneft and Lukoil last week, and EU member states recently approved a 19th package of penalties on Russia, including a ban on Russian LNG imports.
“President Trump’s fresh sanctions hitting Russia’s biggest oil houses aim squarely at choking Kremlin war revenues – a move that could tighten physical flows of Russian barrels and force buyers to re-route volumes onto the open market,” said Phillip Nova’s senior market analyst Priyanka Sachdeva.
Oil benchmarks spiked more than $2 a barrel immediately after the sanctions were announced, supported by an unexpected drawdown in U.S. inventories.
“If New Delhi trims purchases under U.S. pressure, we could see Asian demand pivot toward U.S. crude, lifting Atlantic prices,” Sachdeva added.
Indian refiners are reportedly preparing to sharply cut Russian oil imports following the new sanctions. India has been the largest buyer of discounted Russian seaborne crude since Moscow’s 2022 invasion of Ukraine, importing about 1.7 million barrels per day in the first nine months of this year.
According to sources familiar with the matter, privately owned Reliance Industries, the biggest Indian buyer of Russian crude, is planning to significantly reduce or completely halt purchases.
Trade sources noted that state-run refiners in India rarely purchase directly from Rosneft or Lukoil, typically relying on intermediaries instead.
However, some analysts expressed doubts that the latest sanctions would meaningfully alter global oil balances.
“The new sanctions are certainly upping the ante between US and Russia but I see the oil price jump more like a knee-jerk reaction by the markets rather than a structural shift,” said Rystad Energy’s global market analysis director, Claudio Galimberti.
“So far, almost all the sanctions against Russia for the past 3.5 years have mostly failed to dent either the volumes produced by the country or the oil revenues,” he added, pointing out that India and China have largely maintained their purchases.
In the short term, investors are turning their attention to expected supply increases from OPEC+ as production cuts are rolled back, which could pressure prices.
“The three factors I will be watching going into Nov are OPEC+ unwinding, China’s crude stockpiling, and the wars in Ukraine and Mid-east, in this order,” Galimberti said.