WTI Oil returns above $60.00 amid US sanctions against Russian Crude

• Oil prices rally nearly 8% from last week's lows, reaching levels above $60.00.

• US has imposed additional sanctions on Russian Oil producers Lukoil and Rosneft.

• Effective sanctions on Russian Oil are expected to reduce global crude supply.

Oil prices have accelerated their recovery with US benchmark West Texas Intermediate (WTI) returning to levels beyond $60.00 line as the US administration imposed new sanctions on Russia’s largest Oil companies, which are expected to restrict global supply.

The US Department of the Treasury announced further sanctions on the Russian major Oil exporters Lukoil and Rosneft, as a result of Russia’s lack of commitment to a peace process to end the war in Ukraine.

Sanctions on Russian Oil ease oversupply fears

These measures, considered “tremendous” by US President Donald Trump, are aimed at cutting down funding for the Russian war machine and forcing Moscow to negotiate a peace process “in good faith”.

Trump said that he is also encouraging allies to adhere to these sanctions and reiterated an agreement with Indian President Narendra Modi to reduce purchases of Russian Crude in exchange for lower tariffs on products manufactured in India.

The sanctions are expected to block a significant portion of global supply, offsetting market concerns about an Oil glut. Meanwhile, producer countries continue to increase production, while the growth in the world’s major economies is subdued, and the uncertain trade scenario casts doubts on global demand.