Sweeping US sanctions on Russia’s oil industry will make it more expensive for Moscow to sell its oil and complicate sea-borne crude exports due to restrictions on tankers, analysts and traders said yesterday.
US President Joe Biden’s administration unveiled the measures targeting Russia’s oil and gas revenues on Friday, in an effort to give Kyiv and Donald Trump’s incoming team leverage to reach a deal for peace in Ukraine.
The US has until now been wary of spooking global oil markets and Russia has successfully evaded Western sanctions on its oil – such as the oil price cap imposed by the Group of Seven countries in 2022 – and selling vast volumes to China and India.
However, the new sanctions target traders, insurers and 183 vessels in the so-called shadow fleet which have allowed the world’s second largest oil exporter to get its oil to global markets.
Oil prices have climbed by about 6 per cent since January 8, surging on Friday after the latest sanctions were introduced.
The Kremlin said that the sanctions risked destabilising global markets, and Moscow would do everything possible to counter them.
“It is clear that the United States will continue to try to undermine the positions of our companies in non-competitive ways, but we expect that we will be able to counteract this,” Kremlin spokesman Dmitry Peskov said.
“Such decisions cannot but lead to a certain destabilisation of international energy markets, oil markets. We will very carefully monitor the consequences and configure the work of our companies in order to minimise the consequences of these ... illegal decisions.”
According to Morgan Stanley, which cited data from tanker tracker Vortexa, the tankers sanctioned by the United States carried around 1.5 million barrels of crude oil per day and 200,000 barrels per day of oil products in 2024.
“The most critical element of the sanctions was the new barriers for the sale of Russian crude oil and oil products on international markets, which will most likely lead to a temporary increase in the price discount for Russian liquid hydrocarbons while logistics and traders adapt to difficulties,” Moscow-based Sinara Bank said in a note.
It expected the discount of Russia’s flagship Urals oil blend to dated Brent, which stood at $8 per barrel as of January 8, not to exceed $20. It added that the discount is likely to be offset by rising oil prices.
Proceeds from oil and gas sales for Russia’s federal budget in 2024 jumped by around 26pc to 11.13 trillion roubles ($108 billion), according to the finance ministry.
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