Oil prices jumped after the United States announced sanctions on Russia's largest oil producers, as US President Donald Trump intensified pressure on his counterpart Vladimir Putin to negotiate an end to the war in Ukraine.
Brent crude rose about 4% to trade near $65 a barrel, while West Texas Intermediate crude climbed toward $61 after the United States blacklisted Rosneft and Lukoil, citing Moscow's lack of commitment to the peace process in Ukraine.
Trump is also seeking to pressure major buyers of Russian oil, namely India and China.
These sanctions represent a shift in position for Trump, who announced last week that he would meet with Putin in the coming weeks and repeatedly said he believed Russia wanted to end the war, before stating on Tuesday that he did not want a pointless meeting.
Trump discusses China and India's purchases of Russian oil
After announcing the sanctions, Trump said he plans to speak with Chinese President Xi Jinping about China's purchases of Russian oil during a meeting scheduled for next week in South Korea. He added that Indian Prime Minister Narendra Modi informed him on Tuesday that his country would begin reducing its purchases of Russian oil.
According to data and statements, China and India have become the largest buyers of Russian oil since the outbreak of the war in Ukraine, after other countries avoided dealings with Moscow due to the conflict.
Trump imposed harsh tariffs on India over trade with Russia, while exempting China from any similar measures.
Rosneft, headed by Igor Sechin, a close associate of Putin, and privately owned Lukoil, are Russia's two largest oil producers. Together, they account for nearly half of the country's total exports, about 2.2 million barrels per day in the first half of this year, according to Bloomberg estimates. Taxes on the oil and gas sector account for about a quarter of the Russian federal budget.
The European Union has reached a new package of sanctions against Moscow.
Separately, European Union countries have reached an agreement on a new package of sanctions against Russia, which is scheduled to be adopted on Thursday.
The measures will target 45 entities that helped the OPEC+ member state evade sanctions, including 12 companies in China and Hong Kong, according to a statement issued by Denmark, which holds the rotating presidency of the European Union.
Oil prices recovered from Monday's five-month low amid signs that the recent sell-off was overdone, while a drop in US oil inventories helped ease concerns about a supply glut.
However, futures are still on track for a third monthly loss, as signs of a potential global oversupply continue to weigh on prices.
