Crude oil jumps after U.S. hits top two Russian oil companies with sanctions

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Crude oil prices extended gains post-market Wednesday after the U.S. announced sanctions [https://www.wsj.com/politics/policy/bessent-u-s-to-impose-substantial-sanctions-on-russia-84132054] on Russia's two biggest oil producers, Rosneft and Lukoil, and their subsidiaries, marking the Trump administration’s first effort to impose direct costs on Russia over the war in Ukraine.

The sanctions could bar foreign countries or companies from conducting business with the Russian companies and cut them off from much of the international financial system.

Treasury Secretary Bessent said the U.S. is prepared to take further action, while calling on Russia to agree to a ceasefire.

State-controlled Rosneft and privately held Lukoil are the two top Russian oil producers, jointly accounting for nearly half of the country's total crude oil exports, or ~2.2 million bbl/day in this year's H1, according to Bloomberg estimates.

Brent crude futures added to gains produced during regular trading, recently rising 4.9% to $64.35/bbl, while U.S. WTI crude futures jumped 2.2% to $59.79/bbl.

In regular trading, front-month Brent crude (CO1:COM [https://seekingalpha.com/symbol/CO1:COM]) for December delivery closed +2.1% to $62.59/bbl, and front-month Nymex December crude (CL1:COM [https://seekingalpha.com/symbol/CL1:COM]) ended +2.2% to $58.50/bbl, the highest settlement for both benchmarks in more than a week, while front-month Nymex natural gas (NG1:COM [https://seekingalpha.com/symbol/NG1:COM]) for November finished -0.7% to $3.450/MMBtu.

Oil futures rose Wednesday after President Trump again said India would reduce its purchases of Russian oil, while the U.S. Energy Information Administration reported [https://seekingalpha.com/news/4506609-crude-inventory-falls-by-10m-barrels-for-week-ended-oct-17-eia] a 1 million barrel drop in domestic crude oil inventories following three weekly builds.

The EIA said U.S. crude stocks fell by 961,000 barrels to 422.8 million barrels last week, compared with expectations for a build of at least 1 million barrels, gasoline inventories declined by a greater than expected 2.1 million barrels to 216.7 million barrels, and distillate fuel stocks fell by 1.5 million barrels to 115.6 million barrels.

Refinery capacity use picked after a sharp drop the previous week, rising by 2.9 percentage points to 88.6%, and U.S. crude oil production held steady above 13.6 million bbl/day, according to EIA estimates.

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