Oil prices saw a decline on Friday, though weekly gains were maintained. The drop came after the United States imposed new sanctions on two major Russian oil companies over the war in Ukraine, sparking concerns about oil supply.
Brent crude futures fell by 54 cents, or 0.8%, to $65.45, while US West Texas Intermediate (WTI) crude futures were trading down by 51 cents, or 0.8%, at $61.28. Both benchmarks had surged by over 5% on the previous day and were heading for a weekly gain of around 7%, their biggest since mid-June.
Despite the sanctions, Russian President Vladimir Putin remained defiant on Thursday, while US President Donald Trump imposed restrictions on Russia’s Rosneft and Lukoil. These two companies collectively supply more than five percent of global oil production. Following the US sanctions, Chinese state-owned oil companies temporarily suspended purchases of Russian oil, and Indian refiners, the largest buyers of Russian seaborne oil, are expected to reduce their import volumes.
Sources suggested that buying had decreased due to concerns over reduced supply following the US sanctions on Russia. They anticipated WTI to trade in a $5 range around $65.
Kuwait’s Oil Minister stated that OPEC could reverse production cuts to compensate for any shortfalls. The European Union also approved its 19th package of sanctions on Russia, which includes a ban on the import of Russian liquefied natural gas (LNG).
Investors are also keeping an eye on the upcoming meeting between the US President and Chinese President Xi Jinping next week, which is expected to ease trade tensions between the two countries.
