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Oil prices slipped marginally in early trade on Friday, giving up a small portion of Thursday’s strong rally but remaining set for a robust weekly advance. 

The pullback came amid fresh sanctions imposed by the United States on Russia’s top two oil producers, a move that deepened global supply concerns.

Around 9 AM today, Brent crude futures fell by 36 cents, or 0.55 per cent, to $65.63 per barrel, while US West Texas Intermediate (WTI) crude dropped 33 cents, or 0.58 per cent, to $61.43, reported Reuters.

Market Pauses After Rally

According to Vandana Hari, founder of oil market consultancy Vanda Insights, the decline reflected a round of profit-taking rather than a shift in market sentiment.

“Crude is levelling off, some profit-taking is setting in, indicating the market is not hitting the panic button over Russian supply,” she said.

Hari added that traders were likely to adopt a “wait-and-watch” stance until there was more clarity on geopolitical developments. “It looks like the market is betting on a de-escalation rather than an escalation,” she noted.

Both benchmarks surged over 5 per cent in the previous session and were on course for a weekly rise of about 7 per cent, their strongest since mid-June.

Sanctions Spark Supply Worries

The latest price moves followed US sanctions on Russian oil majors Rosneft and Lukoil, which together contribute more than 5 per cent of global oil output. The measures, announced by President Donald Trump, were aimed at tightening economic pressure on Moscow amid the ongoing war in Ukraine.

Russian President Vladimir Putin responded defiantly, calling the sanctions an “unfriendly act” but insisting they would not significantly affect the Russian economy. He reiterated Russia’s crucial role in ensuring global energy stability.

The sanctions quickly rippled through the global oil trade. Chinese state-owned refiners have temporarily halted purchases of Russian crude, while Indian refiners, the largest importers of seaborne Russian oil, are reportedly preparing to sharply cut their intake, according to industry sources.

“Flows to India are at risk in particular,” said Janiv Shah, Vice President of Oil Markets Analysis at Rystad Energy. “Challenges to Chinese refiners would be more muted, considering their diversified supply sources and existing inventories,” he added.

OPEC Readies To Respond

Kuwait’s oil minister said that the Organisation of the Petroleum Exporting Countries (OPEC) stands ready to act if the new sanctions disrupt global supplies. The group could reverse some of its existing output cuts to stabilise the market, he suggested.

Meanwhile, Britain and the European Union also expanded their punitive measures. London imposed restrictions on both Rosneft and Lukoil last week, while Brussels approved its 19th package of sanctions, including a ban on Russian liquefied natural gas imports.

The EU also targeted two Chinese refiners with a combined capacity of 600,000 barrels per day and Chinaoil Hong Kong, a trading subsidiary of PetroChina, for their continued engagement with Russian crude exports.

Broader Geopolitical Context

The sanctions come as investors await a potentially pivotal meeting between US President Donald Trump and Chinese President Xi Jinping next week. Markets hope the talks could ease escalating trade tensions between Washington and Beijing, which have been marked by a series of retaliatory tariffs and restrictions.

Russia was the world’s second-largest crude oil producer in 2024, trailing only the United States, according to official American energy data.