Oil Jumps After US Sanctions Russia’s Rosneft and Lukoil

Oil jumped after the US announced sanctions on Russia’s biggest producers in the Trump administration’s latest bid to pressure President Vladimir Putin to negotiate an end to the war in Ukraine. 

West Texas Intermediate rose as much as 2.5% to near $60 a barrel, while Brent settled near $63 a barrel on Wednesday. The Treasury Department blacklisted state-run oil giant Rosneft PJSC and Lukoil PJSC, marking a U-turn for President Donald Trump, who had announced last week he would meet Putin in the coming weeks and said repeatedly he believed Russia wanted to end the war before saying Tuesday he didn’t want a wasted meeting.

Oil has bounced back from a five-month low reached on Monday, amid signs the latest selloff was overdone and as a drop in US crude inventories helped ease oversupply concerns. Futures remain on track for a third monthly loss as signs of a global surplus put downward pressure on prices.

European Union countries also reached agreement on a new package of sanctions targeting Russia that are expected to be adopted Thursday morning. The measures will target 45 entities that have helped Russia evade sanctions, including 12 companies in China and Hong Kong, according to a statement from Denmark, which holds the EU’s rotating presidency. 

State-controlled Rosneft, headed by Putin’s close ally Igor Sechin, and privately held Lukoil are the two largest Russian oil producers, jointly accounting for nearly a half of the nation’s total crude-oil exports, or around 2.2 million barrels a day in the first half of this year, according to Bloomberg estimates. Taxes from the oil and gas industries account for about a quarter of the federal budget.

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