Tougher US sanctions to curb Russian oil supply to China and India
Chinese and Indian refiners will source more oil from the Middle East, Africa and the Americas, boosting prices and freight costs, as new United States sanctions on Russian producers and ships curb supplies to Moscow’s top customers, traders and analysts said.
The US Treasury announced on Friday new sanctions targeting Russian oil producers Gazprom Neft and Surgutneftegas, along with 183 vessels involved in transporting Russian oil. These sanctions aim to curtail Moscow's oil revenues, which have been instrumental in funding its war in Ukraine.
Many of the sanctioned tankers were used to transport oil to India and China, as Western restrictions and a price cap imposed by the Group of Seven nations in 2022 redirected Russian oil exports from Europe to Asia. Additionally, some of these vessels have been involved in shipping oil from Iran, another country under sanctions.
The new sanctions are expected to significantly impact Russian oil exports. This could compel Chinese independent refiners to reduce their output, according to two Chinese trade sources.
Matt Wright, lead freight analyst at Kpler, noted that 143 of the newly sanctioned ships are oil tankers, which transported over 530 million barrels of Russian crude in 2022, accounting for 42% of Russia’s total seaborne crude exports. Of this, approximately 300 million barrels were shipped to China, with most of the remainder going to India.
During the first 11 months of last year, India increased its Russian crude imports by 4.5%, reaching 1.764 million barrels per day (bpd), which represented 36% of its total oil imports. Meanwhile, China’s Russian crude imports, including pipeline supplies, rose by 2% to 99.09 million metric tons (2.159 million bpd), comprising 20% of its overall imports during the same period.
The US sanctions are expected to further disrupt Russia's energy trade, potentially reshaping global oil flows and creating economic challenges for Moscow's top customers.
.png "Advertisement")
