Global Oil Turmoil Soars Amid New U.S. Sanctions on Russian Giants

Oil prices jumped 5% as the U.S. imposed sanctions on Russian suppliers Rosneft and Lukoil amid Russia's war in Ukraine. The sanctions might lead to an oil supply deficit, prompting China and India to seek alternative suppliers. The market braces for potential shifts in global oil trade dynamics.

In a significant geopolitical move, oil prices surged around 5% to a two-week high on Thursday. The surge follows the United States' imposition of sanctions on major Russian oil suppliers, Rosneft and Lukoil, over Russia's ongoing conflict in Ukraine.

David Oxley, chief climate and commodities economist at Capital Economics, suggested the sanctions might tip the global oil market into a deficit come next year, as Russia ranks as the world's second-biggest crude producer. This development pushes China and India, key Russian oil importers, to explore alternative supply options to maintain their standing within the Western banking system.

In a related development, refiners in India, who capitalized on discounted Russian crude post-Ukraine war, are scaling back imports in compliance with the ongoing sanctions. This adjustment removes a potential obstacle to improved U.S.-India trade relations. The dynamics of the global oil market are set for further shifts as nations evaluate the ramifications of these sanctions.

(With inputs from agencies.)