Oil sees over 2% gains despite strain in US, India, Russia economic ties

Oil prices surged sharply on Tuesday as fresh missile exchanges in Ukraine disrupted Russian output and triggered new trade penalties from Washington.

According to data from CNBC, Brent crude for November delivery was priced at $69.46 per barrel at 10:54 a.m. London time, up 1.92% from Monday’s close.

In the U.S., WTI for October reached $65.97 per barrel, gaining 3.06%. The WTI contract had no Monday settlement due to the Labor Day holiday.

The latest spike followed another wave of cross-border attacks in Ukraine’s war, now stretching past three and a half years.

Volodymyr Zelenskyy, Ukraine’s president, said in a weekend post that his country will carry out more “deep strikes” on Russian territory.

Reuters estimates these attacks have already knocked out 17% of Russia’s oil processing capacity. CNBC noted it could not independently confirm the report. Talks to get Vladimir Putin to agree to direct negotiations have stalled, despite efforts from both Europe and the United States.

On the economic side, the White House stepped up pressure by adding new import taxes on Indian goods, citing India’s ongoing purchases of Russian crude as the reason. The Indian government pushed back immediately, describing the move as “unfair, unjustified and unreasonable.”

U.S. President Donald Trump, now back in office, went even further, calling America’s trade relationship with India a “totally one sided disaster” during a press conference on Monday.

Washington targets India while China remains untouched

While India is getting hit with tariffs, China (Russia’s largest oil buyer) is still untouched. Since the G7 sanctions kicked in, Beijing has become Moscow’s top customer. But so far, no measures have been taken against it.

Over the weekend, Putin, Xi Jinping, and Narendra Modi attended the Shanghai Cooperation Organization summit, projecting unity among the so-called Global South. There was no sign of anyone pulling back from buying Russian oil.

Meanwhile, oil watchers are waiting on possible output updates from a smaller OPEC+ group, which includes Russia, Saudi Arabia, and six other countries. That meeting is scheduled for September 7. Expectations are low that anything will change.

The group recently accelerated the rollback of a 2.2 million barrels-per-day production cut, and analysts from ING said Tuesday that “the group will leave production levels unchanged for October.” They also warned that OPEC+ might reintroduce cuts if the market continues to show signs of surplus.

Sanctions have become the dominant force behind market changes. Over the past ten years, Western sanctions have grown by nearly 450%, based on figures from LSEG Risk Intelligence.

This includes both direct bans and secondary measures that penalize any country or company doing business with blacklisted entities. The biggest jump came after Russia’s invasion of Ukraine in 2022

In that time, EU restrictions shot up from zero to 2,534. In 2024 alone, the U.S. listed 3,135 new targets, with 70% aimed at Russian businesses or individuals, according to the Center for a New American Security.

Russia uses dark fleets to dodge sanctions

Moscow hasn’t been sitting still. Russian producers and traders, especially those tied to China and India, which now handle 80% of Russia’s crude exports, have built a hidden network of ships and shadow banking systems.

These “dark fleets” don’t use Western insurers or follow shipping rules. That’s how Russian Urals crude has stayed above the $60-per-barrel price cap for 75% of trading days since December 2022.

To stop this, the EU and G7 (minus the U.S.) have agreed to lower the price cap to $46.50 this month, but few expect it to do much.

In August, the Urals-Brent spread narrowed to less than $5 a barrel, the closest it’s been since the war began. Moscow is still making sales, even under restrictions. That said, Britain’s Foreign Ministry claims Russia lost around $154 billion in direct oil tax revenues between 2022 and early 2025.

The West has tried to balance hurting the Kremlin’s income while keeping Russian oil on the market to avoid shocks. The idea is to block profits, not supply. The 2022 G7 cap was meant to do that; allow oil to keep flowing as long as the shipping companies followed pricing rules. But the dark fleet strategy threw that plan off course.

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