Oil Prices Dip Amid Supply Concerns Following U.S. Sanctions on Russian Firms
Oil prices have experienced a modest decline in early trading on Friday, giving back some of the significant gains recorded in the previous session amid persistent global supply concerns following the imposition of new U.S. sanctions on two major Russian firms.
As of 00:24 GMT, Brent crude futures fell by 17 cents, or 0.3%, trading at $65.82 per barrel. Similarly, U.S. West Texas Intermediate (WTI) futures dropped 17 cents, or 0.3%, to $61.62 per barrel.
Despite this decline, both benchmark crude oils are on track for weekly gains estimated at around 7%, marking the highest increase since mid-June, following a rise of over 5% in Thursday's trading.
This market movement follows U.S. President Donald Trump's announcement of sanctions against Russian companies "Rosneft" and "Lukoil," aimed at pressuring Moscow to end its military actions in Ukraine. Together, these companies account for over 5% of global oil production, raising fears of supply disruptions.
In response to the sanctions, Russian President Vladimir Putin took a firm stance on Thursday, escalating geopolitical tensions.
According to Reuters, the U.S. sanctions have led major Chinese state oil companies to suspend their short-term purchases of Russian oil, while other sources indicate that Indian refineries, the largest buyers of Russian oil transported by sea, plan to significantly cut their imports.
Commenting on the market developments, Satoru Yoshida, a commodities analyst at Rakuten Securities, stated, "Purchases driven by fears of supply shortages have decreased following the imposition of U.S. sanctions on Russia."
Kuwait's oil minister, Tarek Al-Roumi, assured that the Organization of the Petroleum Exporting Countries (OPEC) is prepared to address any potential market shortages by adjusting production cuts.
Data from the U.S. Energy Information Administration indicates that Russia was the second-largest crude oil producer in the world in 2024, following the United States.
In this context, investors are closely watching the upcoming meeting between President Trump and Chinese President Xi Jinping next week, amid heightened interest in developments in U.S.-China trade relations.
