Oil Prices Surge Amidst New Sanctions on Russian Giants

Oil prices spiked by 5% following U.S. sanctions on Russian suppliers Rosneft and Lukoil due to the Ukraine conflict. Major buyers, India and China, face challenges in sourcing alternatives. Though market reactions are strong, analysts remain skeptical about long-term impact on Russia's oil revenue.

Oil prices surged by 5% on Thursday as the United States imposed sanctions on Russia's major suppliers, Rosneft and Lukoil, over the ongoing conflict in Ukraine. Brent crude futures climbed $3.39 to $65.98 a barrel, while West Texas Intermediate futures increased $3.31, reaching $61.81.

U.S. sanctions compel China and India's refineries to search for alternative oil sources to maintain access to Western banking systems. Meanwhile, Britain and the EU have steadily expanded their sanctions, the latter approving a 19th package banning Russian LNG imports. The shift to backwardation underscores ongoing market tensions.

The sanctions' real impact hinges on India's response and Russia's ability to secure new buyers, according to analysts such as Giovanni Staunovo from UBS. Despite initial increases, some analysts doubt the long-term repercussions, given past sanctions' limited effect on Russian oil production and revenue.