In addition to soaring crude prices, U.S. diesel futures jumped over 5%, boosting the diesel crack spread to its highest since February 2024.
Multiple trade sources told Reuters that Chinese state oil majors have suspended purchases of seaborne Russian oil from the two companies now under U.S. sanctions, providing a further boost to prices.
Indian refiners are likely to sharply curtail imports of Russian oil due to the new sanctions, industry sources said on Thursday.
But there remains some scepticism in the market about whether the U.S. sanctions would result in a fundamental shift in supply and demand.
On the demand side, U.S. crude oil, gasoline and distillate inventories fell last week as refining activity and demand strengthened, the Energy Information Administration said on Wednesday.
An overview.
Businesses.
The US sanctions Lukoil and Rosneft for the war in Ukraine.
According to sources, Chinese state oil majors halt their purchases of Russian oil.
Refineries in India are examining the oil they buy from Russia.
NEW YORK, October 23 (Reuters) — With the U.S. S. placed restrictions on Rosneft (ROSN), a significant Russian supplier. Lukoil (LKOH) and MM opened a new tab. MM), opens a new tab about the conflict between Russia and Ukraine.
Since Russia was the second-largest producer of crude oil in the world in 2024, behind the United States, sanctions against the country could limit the amount of oil available to international markets. S. . In line with U. A. energy-related data.
At 10:51 a.m., Brent futures were up $2.91, or 4 p.p., to $65 a barrel. m. EDT (1451 GMT), whereas U. S. At $61.39, West Texas Intermediate (WTI) crude increased $2.89, or 4.9 percent.
WTI was on course for its highest close since October 9 and Brent for its highest close since October 8.
Along with skyrocketing crude prices, U. S. Diesel crack spread reached its highest level since February 2024 as a result of a more than 5% increase in diesel futures. Profit margins for refining are measured by crack spreads.
According to a number of trade sources who spoke to Reuters, Chinese state oil majors have stopped buying seaborne Russian oil from the two businesses that are currently owned by the U.S. A. penalties, giving prices an additional boost.
Prices, however, gave up some of their gains when the Kuwaiti oil minister stated that the OPEC group would be prepared to reverse output cuts in order to make up for any market shortage.
The U. A. Refineries in China and India, which are significant consumers of Russian oil, will have to look for substitute suppliers in order to stay in the Western banking system as a result of the sanctions, according to Ole Hansen, an analyst at Saxo Bank.
The U. A. declared that it was ready to act further and urged Moscow to consent to a ceasefire in Ukraine right away.
ADDITIONAL SANCTIONS.
Last week, the United Kingdom imposed sanctions on Rosneft and Lukoil, and the European Union approved the 19th set of sanctions against Russia, which includes a ban on Russian LNG imports.
Together with Chinaoil Hong Kong, a trading division of PetroChina (601857), the EU also added two Chinese refiners with a combined capacity of 600,000 barrels per day (bpd). According to its Official Journal, SS), opens a new tab to its list of sanctions against Russia on Thursday.
How India responds and whether Russia finds other buyers will determine how the sanctions affect the oil markets, according to Giovanni Staunovo, an analyst at UBS.
Following Moscow’s war in Ukraine, India emerged as the biggest purchaser of discounted seaborne Russian crude.
According to industry sources on Thursday, Indian refiners are expected to drastically reduce their imports of Russian oil as a result of the new sanctions.
According to two people familiar with the situation, privately held Reliance Industries, the largest Indian purchaser of Russian crude, intends to cut back on or stop such imports entirely.
However, the market is still a little skeptical about whether the U. S. Supply and demand would fundamentally change as a result of sanctions.
Analyst Claudio Galimberti of Rystad Energy stated, “So far, practically all of the sanctions against Russia for the past 3 1/2 years have mostly failed to dent either the volumes produced by the country or the oil revenues.”.
Crude’s gains on Thursday were restrained by worries about oversupply in the wake of OPEC+ production increases. UBS anticipates that Brent will stay in the $60–$70 range. The Organization of the Petroleum Exporting Countries, along with allies like Russia, are part of OPEC+.
Regarding the demand side, U. S. The Energy Information Administration reported on Wednesday that last week’s decline in crude oil, gasoline, and distillate inventories was due to a strengthening of demand and refining activity.
He Lifeng, the vice premier of China, will meet with U separately. S. . In an attempt to defuse an unanticipated escalation in tension ahead of a summit of key leaders, Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer spoke Friday.
Additional reporting by Seher Dareen in London, Enes Tunagur in London, Katya Golubkova in Tokyo, and Scott DiSavino in New York; editing by Kim Coghill and Elaine Hardcastle.
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