Oil prices surge by 5% after U.S imposes sanctions on major Russian suppliers

Thursday, October 23, 2025 - Oil prices rose by 5% on Thursday, October 23 after the U.S. imposed sanctions on major Russian energy companies Rosneft and Lukoil over the war in Ukraine, extending gains from the previous session.

Brent crude futures were up $3.39, or 5.4%, at $65.98 a barrel, while U.S. West Texas Intermediate (WTI) crude futures were up $3.31, or 5.7%, at $61.81. The futures had initially jumped by more than $2 a barrel immediately after the U.S. sanctions were unveiled, also gaining support from a surprise decline in U.S. crude stockpiles.

The U.S. sanctions mean that refiners in China and India, which are major buyers of Russian oil, will need to seek alternative suppliers to avoid exclusion from the Western banking system, according to Saxo Bank analyst Ole Hansen.

The impact of the sanctions on oil markets will heavily depend on the reaction from India and whether Russia can quickly find alternative buyers, noted UBS analyst Giovanni Staunovo. India became the largest buyer of discounted seaborne Russian crude following Moscow's invasion of Ukraine.

Industry sources indicated on Thursday that Indian refiners are likely to sharply curtail imports of Russian oil due to the new measures. Privately-owned Reliance Industries, the top Indian purchaser of Russian crude, reportedly plans to reduce or halt such imports entirely.

The U.S. said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Ukraine. This follows the United Kingdom's sanctioning of Rosneft and Lukoil last week, and the EU's approval of a 19th package of sanctions that includes a ban on imports of Russian LNG.

Despite the immediate price jump, some market scepticism remains over whether the U.S. sanctions will fundamentally shift the balance of supply and demand. Rystad Energy analyst Claudio Galimberti pointed out that almost all sanctions against Russia over the past three and a half years have largely failed to reduce the volumes produced by the country or its oil revenues.

Furthermore, oversupply concerns following recent OPEC+ production increases capped crude's gains on Thursday, with UBS expecting Brent to remain between the $60 and $70 range

On the demand side, U.S. crude oil, gasoline, and distillate inventories fell last week as refining activity and demand strengthened, the Energy Information Administration confirmed on Wednesday.