The Brent crude oil grade went up by 4.94 per cent or $3.03 to $64.35 per barrel on Wednesday after the United States imposed Ukraine-related sanctions on Russia, targeting oil companies.
Also, the US West Texas Intermediate (WTI) crude futures climbed higher during the session by $1.42 or 2.43 per cent to $59.92 a barrel.
US Treasury Secretary Scott Bessent said yesterday that, given Russian President Vladimir Putin’s refusal to end the war against Ukraine, it was sanctioning Russia’s two largest oil companies that fund the three-year war.
The new sanctions target Lukoil and Rosneft, two of Russia’s largest oil companies.
He added that the President Donald Trump administration “encourages our allies to join us and adhere to these sanctions.” as he also sanctioned dozens of subsidiaries of the two companies, blocking their US assets and prohibiting American entities from doing business with them.
The sanctions followed a 19th package of restrictions approved by the European Union that includes a ban on Russian liquefied natural gas imports, and a similar move by the United Kingdom last week, sanctioning the same Russian energy giants.
The sanctions mark a significant policy shift for President Trump, who had previously avoided targeting Russian oil firms, opting instead for tariffs and trade measures.
Earlier this year, Trump imposed 25 per cent tariffs on Indian goods in retaliation for India’s continued purchases of discounted Russian oil.
However, the White House has so far avoided sanctioning Chinese buyers, another key market for Russian crude. Since the $60 per barrel price cap on Russian oil was introduced by Western nations in 2022, Russia has rerouted much of its crude exports from Europe to Asia, with India and China becoming its top customers.
Already, Western governments are pressuring Asian buyers to reduce their purchases of Russian oil.
Oil prices were also supported by growing US energy demand evidenced by crude oil, gasoline and distillate inventories falling last week as refining activity and demand strengthened.
The Energy Information Administration said on Wednesday that US crude stocks fell by 961,000 barrels to 422.8 million barrels last week.
Investors were also closely watching the progress of US-China trade talks as officials from both countries are set to meet this week in Malaysia.
President Trump said on Monday he expects to work out a fair trade deal with Chinese President Xi Jinping, whom he was due to meet in South Korea next week.