Quick overview

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The market was thrown off balance by US sanctions on major Russian producers, which increased the likelihood of supply disruptions and increased demand for alternative grades, putting oil on course for its largest weekly gain since June. West Texas Intermediate was below $62, and Brent was trading close to $66 per barrel on Friday, up about 7% for the week.

Russian crude flows to India, a major buyer, are expected to decline as a result of the sanctions against Rosneft PJSC and Lukoil PJSC, and some Chinese state-owned refiners have suspended investments. The US actions are taken at a time when the world’s supply is increasing, and Russia has a lot of experience evading sanctions brought on by its conflict in Ukraine.

OPEC aims to boost production if demand needs it, according to Kuwait’s oil minister, who also issued a warning about price increases.

Chinese majors are evaluating the effects of US sanctions, and some have halted spot purchases of Russian crude, primarily ESPO. Next week, President Donald Trump will meet with his counterpart, Xi Jinping, to discuss the oil trade between China and Russia. Robert Rennie, head of commodity and carbon research at Westpac Banking Corp., stated,

“What happens to shipping activity data over the next few weeks will be crucial, and if we do see signs of a sudden halt or sharp slowdown for Russian exports, we can certainly see another leg higher.”. According to a Kremlin official, Russia expects its budget to be hit, but it will use its network of traders and shadow tankers to lessen the financial impact.

The two biggest producers in the nation are Lukoil and Rosneft, which Igor Sechin, a close ally of President Vladimir Putin
In addition, Russia is regularly attacked by Ukraine on its refineries, crude pipelines, and export terminals, and the European Union added more pressure on the Kremlin with a fresh set of sanctions aimed at the nation’s energy infrastructure. Kyiv reported that a Rosneft plant had been struck. Although President Donald Trump had postponed sanctions against Russia, the status of Ukraine has marked a significant reversal.