At 09:50 GMT, Light Crude Oil Futures are trading $61.61, up $3.11 or +5.32%.
The sanctions, announced Wednesday by the U.S. Treasury, aim to limit Russia’s ability to finance its war in Ukraine by cutting off access to global markets. Similar measures were already enacted by the UK last week, and the EU added further pressure with a 19th sanctions package, including a ban on Russian LNG imports. U.S. officials emphasized their readiness to escalate measures further if Moscow does not agree to an immediate ceasefire.
Indian Demand for Russian Crude Expected to Drop
One of the most significant market reactions is expected from India, now the largest buyer of Russian seaborne crude since the start of the Ukraine war. Sources familiar with the matter indicated that Reliance Industries—India’s top importer of Russian oil—is preparing to significantly cut or completely halt purchases. This shift is being driven by concerns over financial exclusion from the Western banking system if Indian firms continue dealing with sanctioned entities.
The potential loss of Indian demand introduces fresh supply risks for Russia and tighter availability for Asia, likely supporting international crude benchmarks if sustained. However, UBS noted the ultimate price impact will depend on whether Russia can secure alternative buyers outside the Western financial system.
Market Skepticism Over Long-Term Impact of Sanctions
Despite the sharp rise in prices, analysts caution that previous sanctions over the past 3.5 years have had limited success in reducing Russian output or revenue. Rystad Energy warned that skepticism about long-term supply disruptions could cap further upside unless compliance from major buyers like India materializes.
Contributing to Thursday’s price action was a surprise drawdown in U.S. crude, gasoline, and distillate inventories, reported by the EIA. Strengthening domestic demand and refining activity added a bullish layer to an already volatile market backdrop.
