Oil is set to record its biggest weekly gains since June after US sanctions against Russia

Oil is on track for its biggest weekly gains since June after U.S. sanctions on the most prominent Russian companies unsettled the market, raising fears of supply disruptions and increased demand for alternative raw materials. Brent crude fell to around $65 a barrel on Friday, but rose about 7% during the week, while West Texas Intermediate fell below $62. Russian crude flows to India, one of the biggest buyers, are expected to decline following the sanctions imposed on Rosneft and Lukoil, while its repercussions on China’s purchases are still unclear. Trump aims to discuss Russian oil exports with Xi. US President Donald Trump plans to raise the issue of China’s purchase of Russian oil during his meeting with his Chinese counterpart Xi Jinping next week. Moscow may try to persuade Beijing to increase its imports if India pulls out of the trade, but the Chinese economy, the world’s second largest, is unlikely to absorb the entire surplus of Russian crude. The US measures come at a time when global inventories are experiencing a marked increase, while Russia has extensive experience in circumventing the sanctions imposed as a result of its war in Ukraine. The Kuwaiti oil minister said OPEC is ready to increase production if necessary, and at the same time warned of a possible rise in prices. An official close to the Kremlin said that Russia expects a hit to its budget but will tap into its network of traders and shadow carriers to limit the financial impact of the sanctions. Rosneft, led by Igor Sechin, who is close to President Vladimir Putin, and Lukoil, are the two largest oil producing companies in the country. Also read: Russia seeks to circumvent oil sanctions to reduce impact on its budget. Monitoring of Russian exports and a possible rise in prices. Robert Rennie, head of commodity and carbon research at Westpac Bank, said: “The key factor in the coming weeks is what will happen in the shipping activity data. If we see a sudden stop or a sharp slowdown in Russia’s oil exports, we could see a rise.” New prices. For its part, the European Union has increased pressure on the Kremlin through a new package of sanctions targeting Russian energy infrastructure, at a time when Russia faces repeated Ukrainian attacks on its refineries, pipelines and export ports. On Thursday, Kiev announced a strike targeting a Rosneft facility. A Radical Shift in Washington Policy. Trump has previously refrained from imposing sanctions on Russia, but the lack of progress in the Ukraine war has prompted him to radically change Western policy, which had previously aimed to limit the Kremlin’s income through a price ceiling on Russian oil, to avoid major supply disruptions or sharp price increases. The price premium between nearby and subsequent Brent crude futures, known as the spot premium spread, narrowed this month on indications of a possible global glut in supplies, but it has widened significantly in structure following the announcement of the sanctions.