The US has imposed tougher sanctions on Russian oil producers and ships, aiming to curb supplies to top buyers China and India. The move is expected to disrupt Russian oil exports, pushing prices up globally.
US Treasury officials have sanctioned Gazprom Neft, Surgutneftegas, and 183 vessels that shipped Russian oil, targeting the revenues used to fund Russia’s war in Ukraine. Many of these tankers were used to ship oil to India and China as Western sanctions shifted trade from Europe to Asia.
As a result, Chinese independent refiners will cut refining output if ESPO supply is hit, two Chinese trade sources said. The US sanctions will force Chinese independent refiners to find alternative suppliers in the Middle East, Africa, and the Americas, driving up spot crude prices and freight costs.
Global oil prices have risen to their highest in months as a result of the expected disruption in Russian supply. Indian refiners are likely to scramble for alternatives in Middle Eastern and Atlantic Basin crude, while Chinese refiners may turn to heavier Middle Eastern oil or Canadian crude from the Trans-Mountain pipeline.
The new sanctions will push China and India back into the compliant oil market, where prices are rising due to increased demand from the region. Indian oil refining officials have said they have no option but to seek more supply from the Middle East, with some considering US oil as well.
The sanctions will significantly reduce the fleet of ships available to deliver crude from Russia in the short term, pushing freight rates higher. Chinese and Indian refiners are expected to find alternative suppliers to meet their demands, leading to increased competition for oil supplies in the region.
Source: https://www.reuters.com/markets/commodities/tougher-us-sanctions-curb-russian-oil-supply-china-india-2025-01-12