[HOUSTON] Oil prices fell on Friday (Oct 24) as scepticism crept into the market about the Trump administration’s commitment to sanctions on Russia’s two biggest oil companies over the war in Ukraine.
Brent crude futures settled US$0.05, or 0.1 per cent, lower at US$65.94 a barrel, while US crude futures finished at US$61.50 a barrel, down US$0.29, or 0.5 per cent.
Both benchmarks had risen earlier in the session, extending gains of more than 5 per cent made on Thursday after the sanctions were announced, but retreated in the last two hours of trading. They still ended the week over 7 per cent higher, the biggest weekly rise since mid-June.
“There is renewed scepticism these sanctions will be as harsh as they are said to be,” said John Kilduff, partner with Again Capital LLC.
US President Donald Trump hit Russia’s Rosneft and Lukoil with sanctions to pressure Russian President Vladimir Putin to end the Ukraine war.
The two companies together account for more than 5 per cent of global oil output, and Russia was the world’s second-biggest crude oil producer in 2024 after the US.
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The sanctions prompted Chinese state oil majors to suspend Russian oil purchases in the short term, trade sources told Reuters. Refiners in India, the largest buyer of seaborne Russian oil, were set to sharply cut Russian crude imports, industry sources said.
“Flows to India are at risk in particular,” Janiv Shah, a vice-president of oil markets analysis at Rystad Energy, said in a client note. “Challenges to Chinese refiners would be more muted, considering the diversification of crude sources and stock availability.”
Kuwait’s oil minister said the Organization of the Petroleum Exporting Countries would be ready to offset any shortage in the market by raising production.
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The US said it was prepared to take further action, while Putin derided the sanctions as an unfriendly act, saying they would not significantly affect the Russian economy and talking up Russia’s importance to the global market.
Britain imposed sanctions on Rosneft and Lukoil last week and the European Union approved a 19th package of sanctions against Russia that includes a ban on imports of Russian liquefied natural gas.
The EU also added two Chinese refiners with a combined capacity of 600,000 barrels per day, as well as Chinaoil Hong Kong, a trading arm of PetroChina, to its Russian sanctions list, its official journal showed on Thursday.
Looking ahead, investors were also focusing on a meeting between Trump and Chinese President Xi Jinping next week as the pair work to defuse longstanding trade tensions and end a spate of tit-for-tat retaliatory measures. REUTERS
