Spot premiums in the global crude oil market surged on Thursday after the United States imposed fresh sanctions on Russian oil giants Rosneft and Lukoil, intensifying concerns over supply disruptions and prompting a shift in demand toward the Middle East, Africa, and South America. The sanctions, aimed at penalizing Russia for its ongoing war in Ukraine, are expected to reshape global trade flows as top importers like China and India seek alternative suppliers.
Brent crude futures climbed over 4% on Thursday, reflecting growing uncertainty in the market. Indian and Chinese refiners are expected to reduce imports of Russian crude to comply with U.S. restrictions, industry sources said, while seeking replacement barrels from other producers. This sudden shift sparked a rally in spot premiums for Middle Eastern crude benchmarks, reversing earlier declines caused by ample supply from OPEC+ output increases.
According to Reuters data, Cash Dubai’s premium rose to a three-week high of $2.71 per barrel, more than double the previous session’s $1.26. Oman and Murban grades also climbed to one-month highs at $3.12 and $2.86 a barrel, respectively.
Reliance Industries, India’s largest private refiner, will halt crude imports under its long-term deal with Rosneft, which supplied nearly 500,000 barrels per day. Indian state-run refiners, including Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, are also reviewing their contracts to avoid purchasing oil from sanctioned Russian firms.
Reliance has already begun sourcing cargoes from Brazil and the Middle East, including Qatari al-Shaheen, Iraqi Basra Medium, and other regional grades. Analysts expect Middle Eastern producers to benefit from the redirection of demand.
The Brent-Dubai spread narrowed to just 1 cent a barrel, making Atlantic Basin crudes more attractive for Asian buyers. With the sanctions tightening global supply, analysts foresee continued volatility in oil prices and trade patterns in the coming weeks.