Oil prices surge 4% as US hits Russian energy giants with sanctions
3 Min Read
The US sanctions on Russia’s top oil firms over the Ukraine war prompt a rise in global oil prices and draw coordinated responses from allies.
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A motorist fills up the gasoline tank of a vehicle at a Costco warehouse August 22, 2024, in Parker, Colorado. (AP)
Oil prices surged by more than $1 per barrel on Thursday, building on gains from the previous session, after the United States imposed sanctions on Russian oil giants Rosneft and Lukoil over the ongoing war in Ukraine.
Brent crude futures rose $1.76, or 2.81%, to $64.35 per barrel by 0041 GMT, while US West Texas Intermediate (WTI) crude gained $1.68, or 2.87%, to $60.18. The immediate market reaction saw both benchmarks climb more than $2 per barrel, driven not only by the sanctions but also by rising US energy demand.
US Treasury Secretary Scott Bessent outlined the rationale behind the new measures: “Given President Putin's refusal to end this senseless war, Treasury is sanctioning Russia's two largest oil companies that fund the Kremlin's war machine.”
The US also signaled its willingness to escalate further, urging Moscow to agree to an immediate ceasefire in Ukraine. Notably, President Donald Trump had previously refrained from sanctioning Russia over the conflict, instead opting to leverage trade measures.
International coordination
The United Kingdom imposed sanctions on Rosneft and Lukoil last week. Meanwhile, EU member states approved their 19th sanctions package targeting Russia, which includes a ban on imports of Russian liquefied natural gas (LNG).
“While the sanction news has buoyed the crude oil price, the rise thus far has been relatively modest because past sanction/tariff threats have been diluted or delayed, and also by the difficulties of enforcing the sanctions,” said Tony Sycamore, market analyst at IG.
As part of a broader effort to curb Russian energy revenues, the US last week urged Japan, a key buyer of Russian LNG, to halt energy imports from Russia ahead of President Trump’s upcoming visit to Asia.
Wider context
The latest sanctions on Russia reflect more political posturing than practical leverage, as Moscow has already diversified its energy and trade routes toward Asia. By cutting off Russian LNG, Brussels risks deepening its own energy vulnerability, particularly with winter ahead and global gas prices still volatile.
Despite Western claims of tightening the noose, Russia’s economy has shown remarkable adaptability, driven by domestic production and non-Western partnerships.
In the long run, such measures may erode Europe’s industrial competitiveness more than they weaken the Kremlin, further accelerating the global shift toward a multipolar economic order.
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