MOSCOW (Reuters) -U.S. President Donald Trump hit Russia's two biggest oil companies with sanctions in his latest sharp policy shift on Moscow's war in Ukraine, prompting global oil prices to rise by 3% on Thursday and India to consider cutting Russian imports.

The sanctions, unveiled by the U.S. Treasury, target oil companies Rosneft and Lukoil, and mark a dramatic U-turn by Trump, who said only last week that he and Russian President Vladimir Putin would hold a summit in Budapest to try to end the war in Ukraine.

But in his latest turnaround on the conflict, Trump said on Wednesday the planned summit was off because he did not believe it would achieve the outcome he wanted and complained that his many "good conversations" with Putin did not "go anywhere".

"We cancelled the meeting with President Putin - it just didn't feel right to me," Trump told reporters at the White House. "It didn't feel like we were going to get to the place we have to get. So I cancelled it, but we'll do it in the future."

TARGETING ABILITY TO FUND WAR

Scott Bessent, the U.S. Treasury Secretary, made clear Washington stood ready to take further action and was targeting Russia's ability to fund a war it launched in February 2022.

"Given President Putin's refusal to end this senseless war, Treasury is sanctioning Russia's two largest oil companies that fund the Kremlin's war machine," Bessent said in a statement. "We encourage our allies to join us in and adhere to these sanctions."

Russia's Foreign Ministry called the U.S. sanctions "counterproductive" when it came to finding a peace deal and said its goals in Ukraine remained unchanged.

Oil and gas revenue, which is currently down by 21% year-on-year, accounts for around one quarter of Russia's budget and is the most important source of cash for Moscow's war in Ukraine, now in its fourth year.

However, Moscow's main revenue source comes from taxing output, not exports, which is likely to soften the immediate impact of the sanctions on state finances.

IMPACT ON GLOBAL OIL PRICES

Ukrainian President Volodymyr Zelenskiy thanked the United States for the new sanctions, saying they were "very important" but that more pressure would be needed on Moscow.

Oil prices jumped more than 3% on Thursday amid worries that the sanctions would disrupt global supply. Indian oil industry sources told Reuters that Indian refiners were poised to sharply curtail imports of Russian oil to ensure they were in compliance with U.S. sanctions.

India has become the biggest buyer of seaborne Russian oil sold at a discount after Western nations shunned purchases and imposed sanctions on Moscow following the 2022 invasion of Ukraine.

The U.S. Treasury has given companies until November 21 to wind down their transactions with the Russian oil producers.

Some analysts say that the new sanctions could force Russia to further discount its oil on world markets to offset the perceived risk of U.S. secondary sanctions, but that pain could in turn be mitigated if global oil prices rise supporting the state's finances and the rouble.

SHIFTING POSITION ON CEASEFIRE

After an August summit with Putin in Alaska, Trump dropped his demand for an immediate ceasefire in Ukraine and embraced Moscow's preferred option of going straight to negotiating an overall peace settlement.

But in recent days he has reverted to the idea of an immediate ceasefire, something that Kyiv supports but which Moscow, whose forces are steadily edging forward on the battlefield, has repeatedly made clear it has no interest in.

Russia has said it opposes a ceasefire because it believes it would only be a temporary pause before fighting resumes, giving Ukraine time and space to re-arm at a time when Moscow says it has the initiative on the battlefield.

In a show of force on Wednesday, Moscow conducted a major training exercise involving nuclear weapons.

Russia argues that negotiating a full peace settlement that paves the way for what it calls a "long-lasting peace" is therefore a better option.

But Kyiv has said that Russia's conditions for a settlement - which would entail Ukraine handing over more land - were unacceptable and, in effect, a demand for it to surrender.