Oil prices took off last night after US President Donald Trump announced new sanctions against Russia, hitting state oil majors Roseneft and Lukoil in particular. A prospect that raises fears of a reduction in supply and which has revitalized crude oil prices, since Russia is part of the OPEC+ group, which recently announced new production increases.
Oil prices
The price of the December futures expiry on Brent, the Northern European oil, jumped after the announcement of the sanctions and is quoted this morning at 64.81 dollars a barrel, up 3.56% compared to yesterday, after reaching a high above 65 dollars. Same movement for the Texan crude contract, WTI, which trades at 60.65 dollars a barrel, up 3.68% compared to yesterday, on a high of 60.89 USD. Despite this increase, crude oil is experiencing a difficult year, characterized by prospects of excess supply and is recording a cumulative decline of around 14-15%.+
Trump pressing Putin
The new sanctions against Russia were initially announced by American President Donald Trump, who canceled the meeting with Putin in Budapest, to put pressure on the Russian leader and induce him to put an end to the war in Ukraine.
“I canceled the meeting with Putin, we wouldn’t have gotten where I wanted to go”
the US leader explained, adding
“I thought it was the right time for new sanctions against Russia.”
Recently, Trump also tried to pressure India to end purchases of Russian oil, as New Delhi is one of the largest buyers of Russian crude.
The US Treasury confirms the new sanctions
The US Treasury Department’s Office of Foreign Assets Control (OFAC) confirmed the new sanctions against Russia yesterday, “due to Russia’s lack of serious commitment to a peace process to end the war in Ukraine”.
“Today’s actions increase pressure on Russia’s energy sector and reduce the Kremlin’s ability to raise resources for its war machine and support its weakened economy.”
explains a note from the US Treasury.
“Given President Putin’s refusal to end this senseless war, the Treasury is sanctioning the two major Russian oil companies that finance the Kremlin’s war machine”
explained Secretary Scott Bessent, saying himself
“ready to take further action, if necessary, to support President Trump’s efforts to end another war.”
Moscow state companies hit
The sanctions target Russia’s two largest oil companies, Rosneft and Lukoil. Rosneft is a vertically integrated energy company specializing in the exploration, extraction, production, refining, transportation and sale of oil, natural gas and petroleum products. Lukoil is engaged in the exploration, production, refining, marketing and distribution of oil and gas in Russia and internationally.
The two companies were targeted “for operating in the energy sector of the Russian Federation”, but the US Treasury Department has also identified their subsidiaries based in Russia, controlled directly or indirectly with a stake of at least 50% of the capital, which are blocked like their parent companies.
