Oil prices rose sharply on Thursday, climbing over 3%, after reports that Indian refiners are reconsidering their purchases of Russian oil following a fresh round of US sanctions against Moscow’s major energy companies, reported Reuters.
The report mentioned that Indian refiners have started reviewing their oil import plans after the US imposed sanctions on Rosneft and Lukoil, two of Russia’s major oil producers, over the ongoing war in Ukraine.
Brent Crude futures gained $2.12, or 3.4%, to trade at $64.71 a barrel, while US West Texas Intermediate (WTI) rose by $2.09, or 3.6%, to $60.59 by 0614 GMT.
India, which has been the largest buyer of discounted Russian oil since 2022, imported around 1.7 million barrels per day in the first nine months of this year. However, the latest sanctions could now force Indian companies to shift to other suppliers.
Reliance Industries, India’s top buyer of Russian crude, is reportedly planning to reduce or even halt its imports, according to two people familiar with the matter.
State-run refiners, on the other hand, mostly buy Russian oil through intermediaries and are less directly affected by the sanctions, trade sources said.
“If New Delhi trims purchases under US pressure, we could see Asian demand move toward US crude, which may lift prices in the Atlantic market,” said Priyanka Sachdeva, Senior Market Analyst at Phillip Nova, the report mentioned.
The US said it is prepared to take further action if Moscow does not agree to a ceasefire. Britain also sanctioned Rosneft and Lukoil last week, while EU nations have approved a 19th sanctions package, which includes a ban on imports of Russian LNG.
Oil markets reacted quickly to the latest sanctions, with both Brent and WTI futures rising by more than $2 a barrel shortly after the announcement. Prices were also supported by an unexpected drop in US crude inventories.
Despite the jump in prices, some analysts believe the reaction may be short-lived.
“The new sanctions are raising tensions between the US and Russia, but this looks more like a knee-jerk market response than a lasting change,” said Claudio Galimberti, Global Market Analysis Director at Rystad Energy.
He added that previous sanctions had little long-term effect on Russia’s oil output or revenues, as many buyers in India and China continued to purchase Russian barrels.
Analysts said the coming weeks will largely depend on changes in OPEC production, China’s crude stockpiling activities, and the ongoing conflicts in Ukraine and the Middle East.
According to Galimberti, the three main factors to watch in November are the gradual unwinding of OPEC production cuts, China’s stockpiling trends, and rising geopolitical tensions, in that order.
With India potentially scaling back Russian oil imports, global oil trade patterns may shift again, and much will depend on how far the sanctions go and whether buyers find reliable alternatives in time.