The reason why Russia has not suffered too much until today from the embargoes and sanctions imposed by Western countries and their allies since the invasion of Ukraine almost three years ago is because Moscow found new customers for its oil, especially by selling it at knockdown prices. China and India thus rushed into Russian barrels. And if Russian gas exports have collapsed, this has not at all been the case for oil exports, which have a much greater impact on the country’s foreign exchange inflows. But the situation could radically change in the coming months with what the Bloomberg agency described as “ farewell message » from the Biden administration to Russia a few days before Donald Trump took office.
Late last week, on January 10, the US Treasury imposed new sanctions on Russian oil producers Gazprom Neft and Surgutneftegas as well as as many as 183 ships in the so-called “ghost fleet” that transport their barrels. The measures also target networks of intermediaries who trade in contraband oil and associated services. Russian insurers Ingosstrakh Insurance Company and Alfastrakhovanie Group are also sanctioned.
« The largest sanctions ever taken against the Russian energy sector… »
Many of the 183 tankers targeted were used to transport Russian oil to India and China, as Western sanctions and the Group of Seven’s 2022 price cap effectively displaced almost all trade Russian oil from Europe to Asia. Some of its tankers also transported oil from the Islamic Republic of Iran, which is also subject to sanctions. And the impact of the new sanctions against Russia was immediate. The Bloomberg agency reports that three tankers “discreetly” transporting more than two million Russian barrels which were due to arrive in Chinese ports on January 15 suddenly stopped off the coast…
Daleep Singh, a top White House adviser on the economy and national security, said in a statement that the measures taken were ” the largest sanctions ever taken against the Russian energy sector, which is by far the main source of revenue from Vladimir Putin’s war “. Sanctions are expected to cost Russia billions of dollars a month if enforced sufficiently, another U.S. official said. “ There is not a step in the production and distribution chain that is not affected, which gives us the assurance that smuggling will be even more costly for Russia “, declared this official.
In return, Moscow accused the United States of being willing to risk causing global energy instability. The Russian Foreign Ministry said that on the eve of the end of “ inglorious time in power » by Joe Biden, Washington was trying to “ cause at least a little harm to the Russian economy, even at the cost of destabilizing world markets ».
The announced fall in Chinese imports
And it is true that the sanctions, by effectively making global supply scarcer, should contribute to the continuation of the rise in oil prices which has been going on for four months now. Oil prices jumped by more than 3% when the new sanctions taken by the US Treasury were announced. Since the lows reached last September, barrel prices have increased by 20% for WTI (West Texas Intermediate) quality and 17% for Brent. On January 13, they stood at $78 and $81 respectively.
Most analysts seem convinced that Russian oil exports will this time be affected by the new sanctions. They will force independent Chinese refiners to reduce their production in the future, two Chinese commercial sources told Reuters on condition of anonymity. Among the sanctioned vessels, 143 are tankers that transported more than 530 million barrels of Russian crude last year, or about 42% of the country’s total seaborne crude exports, said Matt Wright, senior analyst. freight at Kpler.
Of this total, around 300 million barrels were shipped to China and the rest to India. In the first 11 months of last year, India’s imports of Russian crude had increased 4.5% from 2023 to 1.764 million barrels per day, or 36% of India’s total imports. A Singapore-based trader, still cited by the Reuters agency, also estimated that sanctioned oil tankers have also shipped nearly 900,000 barrels of Russian crude per day to China over the last 12 months and that imports “ would now fall precipitously».
New sanctions against Iranian “ghost” fleet
The new sanctions are therefore expected to prompt China and India to return to the official oil market and seek more supplies from the Middle East, Africa and North and South America. Barrel prices have notably increased in recent months due to already growing demand from China and India.
Finally, last month the Biden administration had already sanctioned a larger number of ships from the “ghost” fleet carrying Iranian crude. And it is widely anticipated that the Trump administration will take even tougher measures against the Islamic Republic of Iran. This led the Shandong Port Group to ban sanctioned tankers from calling at its ports in the eastern Chinese province.
Related News :