Oil prices rose sharply Thursday after U.S. President Donald Trump announced sanctions on Russia’s largest oil companies, a move that stands to potentially crimp global supplies. 

At 06:15 ET (10:15 GMT), Brent oil futures for December jumped 5.4% to $65.97 a barrel and West Texas Intermediate crude futures soared 5.6% to $61.77 a barrel. 

Trump hits Lukoil, Rosneft with sanctions 

Trump’s Treasury Department on Wednesday unveiled sanctions against Lukoil and Rosneft, Russia’s two biggest oil companies, and called for an immediate ceasefire with Ukraine. 

Treasury Secretary Scott Bessent said the companies funded “the Kremlin’s war machine,” and that the Treasury was prepared to take more action against Moscow. 

The sanctions now stand to block a chunk of global oil supplies, and helped ease concerns over a looming supply glut. 

Wednesday’s announcement also marks a pivot in Trump’s stance on Russia, who had so far not imposed any direct sanctions on the country in his second term.

“The key question is whether these sanctions are enough to deter buyers of Russian oil, specifically China and India,” said analysts at ING, in a note.

“Sanctions on companies producing more than 5m b/d of oil are significant. However, if we look back to January, the Biden administration imposed similar sanctions on Russian oil producers, Gazprom Neft and Surgutneftegas, along with sanctions on a large share of Russia’s shadow fleet of tankers. These sanctions had little impact on Russian oil exports.”

“We must wait and see if these latest sanctions are more effective or if Russia can circumvent them, as it did with curbs earlier this year.” 

The latest round of U.S. sanctions could also push flows of cheap Russian oil to Indian refiners to near zero, Bloomberg reported on Thursday, citing industry executives. 

Separately, the European Union also imposed fresh sanctions on Russia, targeting Moscow’s shadow fleet of tankers while also banning all Russian liquefied natural gas imports. 

U.S. inventory draw supports crude 

Oil prices have recovered from the five-month lows hit earlier this week, also helped by data showed U.S. inventories unexpectedly shrank in the week to October 17. 

Inventories fell by 0.96 million barrels, against expectations for a 2.2 million barrel build. Draws in gasoline and distillate stockpiles also helped spur some optimism over demand in the world’s largest fuel consumer. 

Markets are now seeking more cues on the U.S. economy from key consumer inflation data for September, which is due on Friday. 

Concerns over the U.S. economy and fuel demand were a key weight on oil prices in recent weeks.