Oil prices continued their rally after the deal on Wednesday (October 22), rising more than $2 a barrel after U.S. Treasury Secretary Scott Bessent said more U.S. sanctions targeting Russia would be announced.

Brent crude jumped $2.44, or 3.98%, to $63.76 after the deal at 3:44 p.m. EDT (19:44 GMT), and U.S. West Texas Intermediate crude rose $2.42, or 4.23%, to $59.66.

Brent crude closed up $1.27, or 2.07%, to $62.59 a barrel, while U.S. West Texas Intermediate crude rose $1.26, or 2.20%, to $58.50. Bessent said U.S. sanctions would be announced on Wednesday or Thursday.

"We'll be announcing after the close of trading this afternoon or early tomorrow morning a substantial increase in Russian sanctions," Bessent told reporters at the White House on Wednesday. Oil prices were also supported by rising US energy demand. US crude, gasoline, and distillate inventories fell last week as refining activity and demand strengthened, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 961,000 barrels to 422.8 million barrels last week, compared with analysts' expectations in a Reuters poll for a 1.2 million barrel increase. "That's impressive for the off-season," said Phil Flynn, senior analyst at Price Futures Group. "It shows the demand side of oil is strong, and the supply numbers don't indicate this oversupply of oil, at least in the US."

Investors are also closely monitoring developments in US-China trade talks, as officials from both countries will meet this week in Malaysia. US President Donald Trump said on Monday that he hopes to reach a fair trade deal with Chinese President Xi Jinping, whom he will meet in South Korea next week. However, on Tuesday, Trump again added uncertainty to the meeting, saying it might not happen.

Supply concerns arose amid news that a summit between Trump and Russian President Vladimir Putin had been postponed, and amid concerns about disruption as Western governments pressure Asian buyers to reduce their purchases of Russian oil. Trump said he had spoken with Indian Prime Minister Narendra Modi on Tuesday, adding that Modi assured him that India would limit its oil purchases from Russia.

"Oil prices rose after reports indicated that the US and India were close to finalizing a trade deal that could see India gradually reduce imports of Russian crude, potentially boosting demand for other types of oil," said MUFG analyst Soojin Kim.

Mint India newspaper reported on Wednesday that the two countries were close to reaching a long-delayed trade deal that would reduce US tariffs on Indian imports to 15-16% from 50%. (alg)

Source: Reuters