Oil jumped after the US announced sanctions on Russia's biggest producers, as President Donald Trump ramps up pressure on his counterpart Vladimir Putin to negotiate an end to the war in Ukraine.

West Texas Intermediate surged as much as 2.8% to trade above $60 after the US blacklisted state-run giant Rosneft PJSC and Lukoil PJSC, citing Moscow's lack of commitment to Ukrainian peace. Trump is also seeking to squeeze Russia's key crude buyers — India and China. Brent closed above $62 on Wednesday.

The sanctions mark a U-turn for Trump, who had announced last week he would meet Putin in the coming weeks and said repeatedly he believed Russia wanted to end the war. But on Tuesday, he said he didn't want a wasted meeting.

Following the sanctions, Trump said he planned to speak to Chinese President Xi Jinping about the nation's purchases of Russian oil at a planned meeting next week in South Korea. On Tuesday, the US president said India's Prime Minister Narendra Modi assured him during a phone call that the country would wind down its purchases of barrels from Moscow.

European Union countries have also reached agreement on a new package of sanctions targeting Russia that are expected to be adopted on Thursday. The measures will target 45 entities that have helped the OPEC+ producer evade sanctions, including 12 companies in China and Hong Kong, according to a statement from Denmark, which holds the EU's rotating presidency. 

Rosneft, headed by Putin's close ally Igor Sechin, and privately held Lukoil, are the two largest Russian oil producers, jointly accounting for nearly a half of the nation's total exports — or around 2.2 million barrels a day in the first half of this year, according to Bloomberg estimates. Taxes from the oil and gas industries account for about a quarter of the federal budget.

Oil has bounced back from a five-month low reached on Monday, on signs the latest selloff was overdone and as a drop in US crude inventories helped ease oversupply concerns. Still, futures remain on track for a third monthly loss as signs of a global surplus put downward pressure on prices.

Source: Bloomberg