Oil prices jump after Trump imposes sanctions on Russian producers oil
Oil prices jumped after Donald Trump announced new sanctions on Russia’s largest producers, at a time when the US President is intensifying pressure on Vladimir Putin to end the war in Ukraine.
Brent crude rose by 3.5%, reaching $64.53 per barrel, against the backdrop of new restrictions imposed on the two largest oil companies in Moscow, Rosneft and Lukoil.
All assets in the United States belonging to the two fossil fuel companies have been frozen, and American companies and individuals will be prohibited from doing business with them.
The United States is also threatening to impose secondary sanctions on foreign financial institutions that do business with Rosneft and Lukoil, which could include banks that facilitate Russian oil sales in China, India and Turkey.
In a sign that this pressure may already be having an impact, reports indicate that refineries in India are preparing for a sharp reduction in their imports of Russian oil. Reliance Industries, the largest Indian buyer of Russian crude, plans to reduce or stop imports entirely, according to Reuters, citing two sources familiar with the matter.
India has been one of the biggest buyers of seaborne Russian crude oil at discounted prices since the war in Ukraine, prompting Trump to impose punitive 50% tariffs on most Indian goods in August.
The sanctions imposed by Trump on Russia on Wednesday are the first that Trump has imposed on the country since his return to the White House in January. Speaking to reporters in the Oval Office, the US President described the measures as “tremendous.”
He said: “These are very large companies against their two major oil companies, and we hope that they will not continue for long. We hope that the war will end.”
Trump added that he hopes Putin will continue negotiations on Ukraine. “I hope he becomes rational, and I hope Zelenskyy becomes rational,” he said. “You know, it takes two to tango, I say, and we’ll figure it out.”
The European Union also announced that it would impose its own sanctions, which are expected to take effect on Thursday, including a ban on imports of Russian liquefied natural gas.
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US Treasury Secretary Scott Besent said the US administration “is prepared to take further action if necessary to support President Trump’s efforts to end another war. We encourage our allies to join us and adhere to these sanctions.”
The British government imposed sanctions on Rosneft and Lukoil last week. The European Union imposed sanctions on Russia’s state-owned company Rosneft, not the privately owned Lukoil. This is largely due to exemptions granted to Hungary and Slovakia, which buy Russian oil.
Trump also confirmed on Wednesday that he had canceled a scheduled summit with Putin. “It wasn’t a good fit for me. I didn’t feel like we were going to get where we needed to get to, so I canceled it. But we will do that in the future,” he said.
The price of oil is now heading towards its largest rise since July, according to analysts at Deutsche Bank.