Oil prices rose sharply on Thursday, continuing gains from the previous session after the US announced heavy sanctions on Russian oil companies, with Treasury Secretary Scott Bessent blasting President Vladimir Putin's “senseless war” against Ukraine.
Brent, the global benchmark for crude oil, was up 4.8 per cent at $65.60 per barrel at 6.38pm on Thursday. West Texas Intermediate, the US gauge for crude, was trading 5.06 per cent higher at $61.46 per barrel.
The new measures imposed by the US target Russia's two largest oil companies, Lukoil and Rosneft.
The Treasury said all entities that are owned 50 per cent or more, directly or indirectly, by the two companies have been blocked, even if not designated by the department's Office of Foreign Assets Control.
“This will be one of the largest sanctions that we have done against the Russian Federation,” Mr Bessent told Fox Business before the announcement.
The levies from Washington come after US President Donald Trump shelved plans to meet Mr Putin for talks in Budapest. Mr Trump said at the time he did not want to have a “wasted meeting”.
“Now is the time to stop the killing and for an immediate ceasefire,” Mr Bessent said. “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.”
He said the department was prepared to take further action to support Mr Trump's effort to end the war. “We encourage our allies to join us in and adhere to these sanctions,” Mr Bessent said.
The decision "marks the most material move to date by the US to shutter the Russian war", Helima Croft, head of global commodity strategy and Mena Research at RBC Capital Markets, said in a note.
"State-owned Rosneft and privately-owned Lukoil account for around half of Russia’s exports. Before this point, US policy had been designed to avoid a serious Russian supply disruption, and immediately following the invasion, the White House worked to keep Russian oil on the market through sanctions carve-outs and price caps to allow barrels locked out of Europe to find a home in third markets such as India."
The sanctions were announced while Mr Trump was meeting Nato Secretary General Mark Rutte at the White House.
Earlier, EU countries approved a new sanctions package against Russia over its war against Ukraine. The new sanctions include a ban on Russian liquefied natural gas imports, according to the president of the EU council.
Meanwhile, Ukrainian President Volodymyr Zelenskyy expressed support for Mr Trump's proposal to freeze the Russia-Ukraine war at the current front lines. The Ukrainian leader was due to visit Brussels and London this week after holding meetings in Norway and Sweden on Wednesday.
Meanwhile, Kuwait's Oil Minister Tariq Al Roumi on Thursday said Opec, the alliance of leading oil producers, would be ready to supply more crude if shortages were created due to the new sanctions announcement. He said he expected oil prices to rise in response to the US and EU actions. Kuwait is Opec's fifth-largest oil producer.
