Business: The US has imposed sanctions on Rosneft and Lukoil, Russia’s two biggest oil companies, in an effort to pressure Russian President Vladimir Putin into negotiating a peace deal in Ukraine. These sanctions also include freezing all assets of Rosneft and Lukoil in the US. After this strictness of America, a rise of more than 4 percent was recorded in the prices of crude oil in the global market on Thursday.
Brent crude rose by $2.71, or 4.3 percent, to $65.30 a barrel. US West Texas Intermediate (WTI) crude prices rose by $ 2.56 or 4.40 per cent to $ 61.06 per barrel.
Before America, Britain also imposed sanctions on Rosneft and Lukoil last week. EU countries also approved the 19th package of sanctions against Russia, which also includes banning imports of Russian LNG. UBS analyst Giovanni Stanovo said the impact of these sanctions on global oil markets will depend on how India responds and whether Russia finds alternative buyers.
There is uncertainty in the market whether US sanctions will lead to fundamental changes in supply and demand. On the demand side, US crude oil, gasoline and distillate inventories declined last week due to strengthening refining activities and demand.
The sanctions could be a big blow to Reliance Industries, as it buys oil directly from Rosneft. In such a situation, Reliance may have to re-balance its imports. Reliance is the largest buyer of Russian oil in India. The company buys half of the country’s 1.7 million barrel per day imports from Russia. However, government refineries can continue purchasing from intermediary traders.
Government refineries are assessing the risks, industry sources said. There is no immediate expectation of an immediate halt to Russian oil purchases, as it buys all the crude it needs from traders, most of whom are European traders and are outside the scope of sanctions.
What for India…will have to find alternative suppliers
Saxo Bank analyst Ole Hansen says that this surge in crude oil prices has been seen after the implementation of US sanctions. Refinery companies in India and China will now have to look for alternative suppliers to avoid being locked out of the Western banking system.
Turmoil in the market…because both Russian companies export 31 lakh barrels of crude per day
The sanctions on both Russian companies are causing turmoil in the international oil market, as they together export 3.1 million barrels of oil per day. Rosneft alone exports 6 percent of global oil production and almost half of Russia’s total crude oil production.
Almost all sanctions imposed on Russia over the past 3.5 years have failed to affect Moscow’s produced volumes or oil revenues, said Claudio Galimberti, analyst at Rystad Energy. Oil prices fell last month on concerns of oversupply after OPEC+ countries increased production.
