Both benchmarks gained more than 5 percent on Thursday and were set for about a 7 percent weekly gain, the biggest since mid-June
Oil prices eased in early trading on Friday, giving up part of the previous day’s sharp gains but remaining poised for a strong weekly gain, as new U.S. sanctions on Russia’s two largest oil producers over the war in Ukraine heightened supply concerns.
As of 5:07 GMT, Brent crude futures fell 0.35 percent to $65.76 a barrel, while U.S. West Texas Intermediate crude futures dipped 0.39 percent to $61.55 a barrel.
Both benchmarks gained more than 5 percent on Thursday and were set for about a 7 percent weekly gain, the biggest since mid-June.
Sanctions on Russia’s two largest oil producers spark supply fears
Oil prices rose after Russian President Vladimir Putin struck a defiant tone on Thursday after U.S. President Donald Trump imposed sanctions on Rosneft and Lukoil, aiming to pressure the Kremlin to end the war in Ukraine. Together, the two companies produce more than 5 percent of the world’s oil supply.
The sanctions have led Chinese state-owned oil firms to temporarily halt purchases of Russian crude, according to trade sources cited by Reuters, while Indian refiners are expected to significantly reduce their crude intake, industry sources said.
OPEC ready to counter supply shortage
Responding to the emerging supply fears, Kuwait’s oil minister said the Organization of the Petroleum Exporting Countries (OPEC) stands ready to counter any supply shortfall by reversing some of its production cuts.
The U.S. signaled it was prepared to take additional measures, while the Russian President dismissed the sanctions as a hostile move, insisting they would have little impact on Russia’s economy and emphasizing the country’s vital role in global energy markets.
Oil prices also found support after Britain imposed sanctions on Rosneft and Lukoil last week, and the European Union approved its 19th sanctions package against Russia, which includes a ban on imports of Russian liquefied natural gas.
Trump-Xi meeting in focus
The European Union also added two Chinese refineries with a combined capacity of 600,000 barrels per day to its Russian sanctions list, along with Chinaoil Hong Kong, the trading arm of PetroChina, according to the bloc’s official journal released on Thursday. Russia was the world’s second-largest crude oil producer in 2024, trailing only the United States, according to U.S. energy data.
Investors are also turning their attention to a scheduled meeting between U.S. President Donald Trump and Chinese President Xi Jinping next week. Trade tensions between the two countries have been intensifying amid a series of retaliatory measures from both sides, but confirmation of the upcoming meeting has helped ease some of those concerns.