Russia’s energy sector has faced a series of setbacks that threaten Vladimir Putin’s war efforts in Ukraine. The U.S.-led sanctions on Russian oil have been followed by China and India rejecting shipments of the commodity. These developments could significantly hurt Moscow, making them an effective leverage tool for incoming President Donald Trump against Putin.
The sanctions, imposed on January 10, targeted Gazprom Neft and Surgutneftegas, along with vessels part of Russia’s “shadow fleet.” The move also blocked two active liquefied natural gas (LNG) projects and large Russian oil projects. China and India, key trading partners, are now getting cold feet about accepting the sanctioned oil.
Energy analyst Tom O’Donnell stated that the sanctions would be more effective than the $60 price cap on oil, as Russian oil exports dwindle due to OPEC+ quotas and market oversupply. He suggested that Trump could use the export of oil products from Russia as leverage against Putin.
Gazprom has proposed cutting its staff numbers from 4,100 to 2,500, citing dwindling revenues and production. The company faces further challenges following the latest U.S. and U.K. sanctions, which also target shipborne LNG.
The impact of the sanctions is already being felt, with prices climbing to a four-month high on Monday. China’s state oil companies and private refiners are turning to alternative suppliers, including crude cargoes from the Middle East. This could hasten preparations for potential disruptions in fuel supply.
Russia’s energy sector is crucial for funding Putin’s military spending plans, which will be a third of the government budget by 2025. Sanctions on these commodities could hamper the Russian leader’s ability to wage war, making them a significant concern for Moscow.
Source: https://www.newsweek.com/putin-energy-oil-gas-sanctions-blow-2014495