Oil prices surged nearly 6% to their highest level in two weeks after the United States imposed new sanctions on Russian energy giants Rosneft and Lukoil, intensifying the strain on global supply chains. Brent crude climbed 5.4% to $65.99 per barrel, while West Texas Intermediate rose 5.6% to $61.79, marking their sharpest daily gains since mid-June.

The sanctions mark a significant escalation in the economic campaign against Russia’s energy exports, which account for roughly 7% of global supply. The move has triggered swift reactions from Asian markets, as refiners in China and India, key buyers of discounted Russian oil—rethink their import strategies to avoid Western financial penalties. Reports suggest Chinese state oil majors have suspended seaborne purchases, while India’s Reliance Industries plans to cut or halt imports altogether.

This tightening supply has fuelled a 7% spike in U.S. diesel futures, boosting refining profit margins to their highest levels since early 2024. Analysts warn that if Russian exports continue to decline, the global oil market could face a supply deficit next year, with knock-on effects for logistics and transport costs worldwide.

OPEC has indicated readiness to stabilise the market by adjusting production, though Russian President Vladimir Putin insisted that replacing Russian oil will take time.

Meanwhile, the European Union and the United Kingdom have reinforced sanctions with new restrictions on Russian liquefied natural gas and affiliated Chinese refiners, adding complexity to the global trading landscape.

While some analysts argue that Russia may still find covert routes to maintain exports, the higher logistical costs and trade rerouting could reshape long-term supply patterns. The coming months will test how resilient the global energy network remains under growing geopolitical pressure.

Discover how these sanctions could redefine global trade routes and energy pricing here.