Oil prices rose 5% on Thursday after the US imposed sanctions on major Russian suppliers Rosneft and Lukoil over the Ukraine war, extending gains from the previous session.

Brent crude futures were up $3.39, or 5.4%, at $65.98 a barrel at 1018 GMT, while US West Texas Intermediate crude futures were up $3.31, or 5.7%, at $61.81.

The US sanctions mean refineries in China and India, major buyers of Russian oil, will need to seek alternative suppliers to avoid exclusion from the Western banking system, according to Saxo Bank analyst Ole Hansen.

The US said it was prepared to take further action as it called on Moscow to agree immediately to a ceasefire in Ukraine.

Britain sanctioned Rosneft and Lukoil last week. EU countries have approved a 19th package of sanctions against Russia that includes a ban on imports of Russian liquefied natural gas (LNG).

Prompt Brent crude futures switched to backwardation as the first-month Brent contract traded as high as $1.98 above the contract for delivery in six months.

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Right after the US sanctions were unveiled, Brent and WTI futures rose by more than $2 a barrel, with support from a surprise decline in US stockpiles.

The impact of sanctions on oil markets will depend on how India reacts and if Russia finds alternative buyers, said UBS analyst Giovanni Staunovo.

India became the largest buyer of discounted seaborne Russian crude in the aftermath of Moscow’s war in Ukraine. Indian refiners are likely to sharply curtail imports of Russian oil due to the new sanctions, industry sources said on Thursday.

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Privately-owned Reliance Industries, the top Indian buyer of Russian crude, plans to reduce or halt such imports completely, according to two sources familiar with the matter.

But there remains some scepticism in the market about whether the US sanctions would result in a fundamental shift in supply and demand.

“So far, almost all the sanctions against Russia for the past 3-1/2 years have mostly failed to dent either the volumes produced by the country or the oil revenues,” said Rystad Energy analyst Claudio Galimberti.

Oversupply concerns following OPEC+ production increases capped crude’s gains on Thursday. UBS expects Brent to remain between $60 and $70.

On the demand side, US crude oil, gasoline and distillate inventories fell last week as refining activity and demand strengthened, the Energy Information Administration said on Wednesday.