Oil drops, on track for weekly gain

Brent crude futures dropped 36 cents, or 0.55%, to $65.63

Oil prices dropped in early trade on Friday, trimming part of the previous day’s surge but remaining on track for a weekly gain, as new U.S. sanctions on Russia’s two biggest oil companies over the war in Ukraine fuelled supply concerns.

Brent crude futures dropped 36 cents, or 0.55%, to $65.63 at 0333 GMT.

Crude is levelling off, some profit-taking is setting in, indicating the market is not hitting the panic button over Russian supply, said Vandana Hari, the founder of oil market analysis provider Vanda Insights.

It is likely to be wait-and-watch mode, until the next twist in the saga, that could be an escalation or a de-escalation, Hari added. Looks like the market is betting on the latter.

The benchmark climbed more than 5% on Thursday and was set for nearly a 7% weekly gain, the biggest since mid-June.

Russian President Vladimir Putin appeared unaffected by the sanctions after U.S. President Donald Trump hit Russia’s Rosneft and Lukoil with sanctions to persuade Russia to end the war in Ukraine. Rosneft and Lukoil together account for more than 5% of global oil output.

Refiners in India, the biggest buyer of seaborne Russian oil, are reportedly set to sharply cut their crude imports.

Flows to India are at risk in particular. Challenges to Chinese refiners would be more muted, considering the diversification of crude sources and stock availability, said Janiv Shah, a vice president of oil markets analysis at Rystad Energy, in a note.

The U.S. said it was prepared to take further action, while Putin derided the sanctions as an unfriendly act, saying they would not significantly affect the Russian economy and talked up Russia’s importance to the global market.