Crude Oil Prices Ease After Surge but Head for Strong Weekly Gain

Crude oil prices fell slightly in early trade on Friday, trimming some of the strong gains from the previous day. Despite the small drop, crude remains on track for a solid weekly increase, as fresh U.S. sanctions on Russia’s top oil companies have sparked supply worries in global markets.

Brent crude futures fell by 0.55% to US$65.63 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 0.58% to US$61.43 per barrel. Both benchmarks had surged more than 5% on Thursday and are expected to post around a 7% weekly gain, the biggest since mid-June.

Sanctions on Russia Trigger Market Uncertainty

The rise in oil prices this week followed new U.S. sanctions targeting Russia’s two largest oil producers, Rosneft and Lukoil. Together, these companies contribute more than 5% of the world’s oil output. The move aims to increase pressure on Moscow amid its ongoing war in Ukraine.

In response to the sanctions, China’s state-owned oil companies have paused their Russian crude purchases for now, while Indian refiners (currently the biggest buyers of Russian seaborne oil) are also expected to reduce imports sharply. This sudden disruption has raised concerns about the availability of Russian crude in global markets.

Russia, which was the world’s second-largest oil producer after the U.S. in 2024, has downplayed the impact of the sanctions. However, global traders remain cautious as they assess how the measures will affect supply and prices in the coming weeks.

OPEC and Global Reactions

The Organisation of the Petroleum Exporting Countries (OPEC) has said it is ready to step in and increase output if supply shortages emerge due to the sanctions. Meanwhile, the European Union has approved a new round of penalties against Russia, including a ban on imports of Russian liquefied natural gas (LNG) and sanctions on several Chinese refiners linked to Russian oil trade.

Britain has also imposed restrictions on Rosneft and Lukoil, aligning itself with U.S. and EU measures.

Trade Tensions Add to the Pressure on Crude Oil Prices

Oil investors are also watching geopolitical developments closely. A meeting between U.S. President Donald Trump and Chinese President Xi Jinping next week could influence both oil prices and global trade relations. Tensions between the two countries have recently escalated, but news of their upcoming meeting has slightly eased market anxiety.

Read more: NOVA and Tata Elxsi Launch Kavach 4.0 to Boost Railway Safety.

Conclusion

While oil prices have cooled slightly after Thursday’s sharp rally, the market remains tense. The latest U.S. sanctions on Russia have created new supply challenges, while global producers weigh how to respond. With trade talks and political developments on the horizon, oil markets are likely to stay volatile in the near term. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.