Oil price jumps and FTSE 100 reaches record high after Trump sanctions Russian producers | Oil

Oil prices rose and energy companies helped the FTSE 100 rise to a record high after Donald Trump announced new sanctions on Russia’s biggest oil producers.

Brent crude rose 5.2% to $65.83 a barrel, its highest level in two weeks, as the US president stepped up pressure on Vladimir Putin to end the war in Ukraine following news of new restrictions on Moscow’s two biggest oil companies, Rosneft and Lukoil.

The rise in oil prices also lifted shares of energy companies Shell and BP by nearly 3%, helping push the FTSE 100 to a record high of 9,579.07.

All assets of the two fossil fuel companies in the United States have been frozen and American companies and individuals will be prohibited from doing business with them.

The United States is also threatening secondary sanctions against foreign financial institutions that do business with Rosneft and Lukoil, which could include banks that facilitate the sale of Russian oil in China, India and Türkiye.

Reports suggest that refiners in India are preparing to sharply reduce their imports of Russian oil. This is a sign that the pressure may already be taking effect. Reliance Industries, the largest Indian buyer of Russian crude oil, plans to reduce or completely stop imports, Reuters reported, citing two sources familiar with the matter.

India has been one of the largest buyers of discounted seaborne Russian crude since the war in Ukraine, prompting Trump to impose punitive tariffs of 50 percent on most Indian products in August.

Wednesday’s sanctions on Russia were Trump’s first sanctions against the country since returning to the White House in January. Speaking to reporters in the Oval Office, the US president described the measures as “tremendous”.

“These are very big companies against two big oil companies, and we hope that this will not continue for a long time. We hope that the war will be concluded.”

Trump added that he hopes Putin will continue negotiations on Ukraine. “I hope it will be reasonable and I hope Zelenskyy will be reasonable too,” he said. “You know, like I said, it takes two to tango, we’ll find out later.”

The EU also announced that it would impose new sanctions, including a ban on imports of liquefied natural gas from Russia.

US treasury secretary Scott Bessent said the US administration is “ready to take further action if necessary to support President Trump’s efforts to end yet another war. We encourage our allies to join us and comply with these sanctions.”

The British government imposed sanctions on Rosneft and Lukoil last week. The EU sanctioned Russian state-owned Rosneft but not privately owned Lukoil. This is largely due to exemptions for Hungary and Slovakia, which purchase Russian oil.

Trump also confirmed that he canceled Wednesday’s summit with Putin. He said: “It didn’t feel right. It didn’t feel like we were going to get where we needed to get, so I canceled it. But we’ll do it in the future.”

According to analysts at Deutsche Bank, the oil price is now on track for its biggest increase since July.

Jorge León, head of geopolitical analysis at Rystad Energy, a leading energy consultancy, called US sanctions against Russia “a significant and unprecedented escalation in Washington’s pressure campaign against Moscow.”

The sharp rise in oil prices following the announcement highlighted market fears that Russia’s crude oil exports – particularly to India, one of its key customers – could fall sharply, he said.

This could also increase the possibility of “major disruptions” in Russia’s crude oil production and exports, which would cause oil market prices to rise further, the official added. “The question now is whether Washington’s latest sanctions will be enough to bring Moscow back to the negotiating table and, if they fail to do so, what options remain to increase pressure without provoking open conflict,” Leon said.