The oil price has jumped after the US imposed sanctions on Russia’s two largest oil companies to increase pressure on the Kremlin to negotiate an end to its war against Ukraine.
The White House’s new measures against Rosneft and Lukoil are the US’s first sanctions against Russia since Donald Trump’s return to office in January. All assets belonging to the two companies in the US have been frozen, and US companies and individuals will be barred from doing business with them.
Significantly, the US is also threatening secondary sanctions on foreign financial institutions that do business with Rosneft and Lukoil – which could include banks that facilitate sales of Russian oil in China, India and Turkey.
India state refiners are reported to be reviewing their purchases of Russian oil barrels to ensure that no supply will be coming directly from Rosneft and Lukoil.
After the US move, Brent crude is up 3.8% at $64.95 a barrel, on top of a 2% rise on Wednesday.
That lifts the oil price away from the five-month low of $60 hit on Monday, which had fuelled hopes that inflationary pressures were easing.
Trade worries have resurfaced after the Trump administration confirmed it is considering new restrictions on software exports to China.
The possible restrictions could cover a wide range of software-powered exports to China, from laptops to jet engines, in retaliation for the clampdown on rare earth exports to the US.
This would open up another flank in the US-China trade war, undermining hopes that Washington and Beijing could succeed in cooling the situation.
The US Treasury secretary, Scott Bessent, told reporters: “Everything is on the table”, when asked about limits on software exports to China, after Reuters reported the plan.
Bessent said: “If these export controls, whether it’s software, engines or other things happen, it will likely be in coordination with our G7 allies.”
This suggestion has knocked markets across the Asia Pacific region today – China’s CSI 300 index has lost 0.75%, while South Korea’s Kospi 200 is down almost 1%.
Today’s key events
• 11am BST: CBI industrial trends
• 1.30pm BST: Chicago Fed national activity index
• 2pm BST: Bank of England’s Swati Dhingra gives speech at the Central Bank of Ireland ESCB Cluster 2 academic conference
• 2.30pm BST: Bank of England’s Jonathan Hall gives speech on “Balancing financial stability and growth: the BoE financial policy committee’s mandate and the search for a social optimum”
We’ll be tracking all the main events throughout the day on our business live blog …
