Chinese and Indian refiners will source more oil from the Middle East, Africa and the Americas, boosting prices and freight costs, as new US sanctions on Russian producers and ships curb supplies to Moscow’s top customers, traders and analysts said.
The US Treasury on Friday imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegas, as well as 183 vessels that have shipped Russian oil, targeting the revenues Moscow has used to fund its war with Ukraine.
Many of the tankers have been used to ship oil to India and China as Western sanctions and a price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some tankers have also shipped oil from Iran, which is also under sanctions.
Russian oil exports will be hurt severely by the new sanctions, which will force Chinese independent refiners to cut refining output going forward, two Chinese trade sources said. The sources declined to be named as they are not authorised to speak to media.
Among the newly sanctioned ships, 143 are oil tankers that handled more than 530 million barrels of Russian crude last year, about 42 per cent of the country’s total seaborne crude exports, Kpler’s lead freight analyst Matt Wright said in a note.
Of these, about 300 million barrels were shipped to China while the bulk of the remainder went to India, he added.