Oil was on track for the biggest weekly gain since June after US sanctions on major Russian producers upended the market, raising the prospect for supply disruptions and greater demand for alternative grades.
Brent dipped toward $65 a barrel on Friday, but was still up around 7 per cent for the week, while West Texas Intermediate was below $62. Russian crude flows to key buyer India are expected to plunge following the penalties on Rosneft PJSC and Lukoil PJSC, though the impact on China’s purchases is less clear.
Still, President Donald Trump plans to raise Chinese buying of Russian oil with his counterpart Xi Jinping at a meeting next week. Moscow may look for the Asian nation to take more barrels if India exits the trade, but the world’s second-biggest economy is unlikely to mop up all the surplus crude.
The US measures come at a time when global supply is swelling, and Russia has plenty of experience skirting sanctions — which have been implemented due to its war in Ukraine. Kuwait’s oil minister said that OPEC is prepared to increase production if demand requires it, and cautioned of higher oil prices.
Russia anticipates a hit to its budget, but the country will deploy its network of traders and shadow tankers to limit the financial impact, according to an official close to the Kremlin. Rosneft, headed by President Vladimir Putin’s close ally, Igor Sechin, and Lukoil are the country’s two largest producers.
“Key over coming weeks will be what happens to shipping activity data, and if we do see signs of a sudden halt or sharp slowdown for Russian exports, we can certainly see another leg higher,”said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp.
The European Union also piled additional pressure on the Kremlin with a new package of sanctions targeting the country’s energy infrastructure, while Russia faces regular Ukrainian attacks on its refineries, crude pipelines and export terminals. On Thursday, Kyiv claimed a strike on a Rosneft plant.
President Donald Trump had held off on punishments against Russia, but the lack of progress on Ukraine has marked a dramatic U-turn. It’s a radical shift of Western policy, which previously sought to limit revenue for the Kremlin through a price cap to prevent a major supply disruption and prices spiking.
The premium that front-month Brent futures held over the next contract — known as the prompt spread — had narrowed this month on signs of an emerging global surplus, but the gap significantly widened in a bullish backwardation structure after the sanctions were announced.
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Published on October 24, 2025
