By Dilin Wu, Research Strategist at Pepperstone
Over the past few days, U.S. sanctions on Rosneft and Lukoil have clearly pushed oil prices higher. That said, these measures are unlikely to create a major supply shock.
The sanctions mainly target trading and settlement rather than actual production, and Russia has long navigated such restrictions using third-party routes and “shadow fleets.” Typically, prices jump briefly after new sanctions, but supply flows adjust. OPEC+ and the U.S. can also step in with extra production or strategic releases to stabilize the market.
Symbolically, the sanctions matter—they signal rising geopolitical pressure, which keeps markets cautious. Only if restrictions expand to insurance or payment channels would physical supply constraints become significant.
In the short term, the uncertainty and heightened tension could support prices, with speculative capital amplifying moves and the winter heating season providing an extra lift.
Over the medium to long term, however, weak demand remains the main limit on oil. The sourcing decisions of India and China will be critical. If they turn to alternative supplies, oil is likely to trade in a higher but still range-bound zone.