Slight Decline in Oil Prices Amid Supply Concerns Following U.S. Sanctions on Russian Companies
Oil prices saw a limited decline in early trading on Friday, losing part of the strong gains recorded in the previous session, amid ongoing concerns about global supplies following the United States imposing new sanctions on two prominent Russian companies.
As of 00:24 GMT, Brent crude futures fell by 17 cents, or 0.3%, to record $65.82 per barrel. U.S. West Texas Intermediate crude futures also dropped by 17 cents or 0.3% to reach $61.62 per barrel.
Despite this decline, both benchmark crude oils are on track to achieve weekly gains estimated at around 7%, the highest since mid-June, after jumping more than 5% in Thursday's trading.
This market movement came after U.S. President Donald Trump announced sanctions against the Russian companies "Rosneft" and "Lukoil", in a move aimed at pressuring Moscow to end the war in Ukraine. Together, the two companies account for more than 5% of global oil production, raising concerns about supply disruptions.
In response to these sanctions, Russian President Vladimir Putin took a hardline stance on Thursday, escalating geopolitical tensions.
Reuters reported that the U.S. sanctions have led major Chinese state oil companies to suspend their purchases of Russian oil in the short term, while other sources indicated that Indian refiners – the largest buyers of seaborne Russian oil – plan to sharply reduce their imports.
Commenting on market developments, Satoru Yoshida, a commodity analyst at Rakuten Securities, said: "Purchasing driven by supply shortage fears has subsided following the U.S. sanctions on Russia."
For his part, Kuwaiti Oil Minister Tarek Al-Roumi confirmed OPEC's readiness to compensate for any potential market shortfall by reducing production cuts.
Data from the U.S. Energy Information Administration indicates that Russia was the second-largest crude oil producer in the world in 2024, after the United States.
In this context, investors are awaiting the upcoming meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping next week, amid widespread interest in the developments of trade relations between the two countries.
