Oil prices experienced a slight dip in early trading on Friday, partially offsetting gains from the previous day. Despite this, both Brent and West Texas Intermediate crude futures remain on track for a substantial weekly increase. Brent crude futures fell by US17¢, or 0.3 per cent, to $US65.82. West Texas Intermediate crude futures decreased by US17¢, or 0.3 per cent, to $US61.62. On Thursday, both benchmarks surged by over 5 per cent, positioning them for a weekly gain of approximately 7 per cent, marking the most significant increase since mid-June.
The United States imposed new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, in response to the war in Ukraine. Rosneft and Lukoil are significant players in the global oil market, collectively accounting for more than 5 per cent of worldwide oil production. The sanctions aim to pressure the Kremlin to cease hostilities in Ukraine.
The US sanctions have reportedly led Chinese state oil majors to temporarily halt Russian oil purchases, according to trade sources. Simultaneously, industry sources suggest that refiners in India, a major importer of seaborne Russian oil, are preparing to significantly reduce their crude imports. This disruption in supply chains has contributed to market volatility and uncertainty.
In response to potential supply shortages, Kuwait’s oil minister has stated that the Organisation of the Petroleum Exporting Countries (OPEC) stands ready to counteract any market deficit by reversing existing output cuts, ensuring a stable supply of oil to the global market.
