Latest US sanctions in analysis on Russia throw global oil trade into chaos
By Florencetan and Nidibalma
SINGAPORE/NEW DELHI (Reuters) – U.S. sanctions on Moscow have been tightened to reduce Russian oil to China and India, reviving demand for Middle Eastern and African crowds, shaking shipping markets, and oil prices It prevented the lifting.
Washington’s January 10 sanctions will more effectively limit Russian oil to more effectively limit Moscow’s oil revenues, the purpose of Western sanctions imposed after the invasion of Ukraine three years ago We target tankers that are targeted to promote the project.
New rules have caused millions of barrels to float on the ship, sending traders looking for alternatives, but trading in Russian crude oil, the largest source of China and India, among top global importers It’s late in March.
Scramble overturned market dynamics. For a few weeks, the High-Sulphur Benchmark Dubai has become more expensive than low-sulphur brent. This opened up opportunities for producers from Brazil to Kazakhstan to share between China and India.
Brazilian crude premiums surged last month to around $5 barrels against Brent on the date, based on costs and freight, from about $2 the previous month, traders said. That premium is currently just under $5 per barrel of cargo arriving in May.
In March, China will import the first cargo of Kazakhstan’s CPC blend in June 2024, Kpler data shows.
According to a Singapore-based trader, the trading arm of Totalenergies was receiving bids in place of personal negotiations to sell Chinese crude cargo, the week after the new sanctions.
Totalenergies did not immediately respond to requests for comment.
Reflecting the rough rush of Middle Easterns, benchmark premiums have more than doubled from December to January, despite low demand from seasonal maintenance refineries. It remains above $3 per 3 barrel in Dubai.
Furthermore, top exporter Saudi Aramco has raised the highest prices of Asian-bound crude oil since December 2023, raising costs for refiners.
Angolan crude sellers said demand is growing from Asian buyers trying to cover.
“Unipek takes a lot of West African crude oil, especially Angolan barrels. They’re making good purchases after the New Year of the month,” the Chinese trader said. Unipec is the trading arm of Sinopec, Asia’s largest refinery. Sinopec did not respond immediately to requests for comment.
With licensed vessels clogged in the water, many traders have been rushing to switch to other vessels, and now costs several times more, adding millions of dollars to each cargo.
Indian scrambling
Increased costs are particularly difficult for Indian refiners. Late last year, the country bolstered its transition from long-standing Middle Eastern sources and bought more oil from Russia.
This week, an Indian oil secretary said that the country’s refiners would like to purchase only Russian oil sourced from unauthorized companies and vessels from the US that effectively reduced the number of available cargo and vessels. Ta.
Due to limited supply of sanctions, the Russian Urals crude discount has reduced the Brent dated crude discount from $2.50 per barrel to $2.90 for delivery in March. Million barrel freight.
Rising Russian crude oil costs have reduced the price gap due to Middle Eastern crude oil, from $6 to $7 to about $3 per barrel for Indian refiners, with few incentives to take risks with secondary sanctions.
Indian buyers decline an offer from Russian shipping giant Sobkomfuro and receive payments in currency shipped to licensed tankers when Russian oil, including Indian rupee, receives payments in the currency shipped to licensed tankers. The source said after the med. week. SovComflot declined to comment.
According to a February 5 memo from Goldman Sachs, the slowdown has resulted in the Russian oil in storage by 17 million barrels since January 10th, reaching 50 million barrels in the first half of 2025. It is expected to rise.
“We can see floating volumes being picked up. Many tankers have Russian oil around Shandong and southern ports in China, which are not usually large entry points,” he said. said the senior executive of the family.
Shandong Province is a hub of independent Chinese refiners, the core buyers of discounted licensed oil from Russia, Iran and Venezuela.
Iran’s output is targeted
The disruption in Russia’s supply comes from the decline in Iran’s oil imports by China’s top customer China, as President Donald Trump recently vowed to zero Tehran’s oil exports.
Goldman Sachs estimated that Iran’s floating storage has increased by 14 million barrels since it rose to a high in 14 months. Enforcement of sanctions could cut Iran’s production by 1 million barrels a day, potentially pushing Brent to a $80 barrel by May, analysts said.
Squeezing cheap crude oil into China, coupled with weak domestic demand, has resulted in several independent refiners taking 500 yuan ($68.62) in large quantities of unconditionally processed crude oil processed based on offers. Instead of losing it, they now close it for maintenance. Ice Brent was delivered to China, traders said.
Meanwhile, Chinese state refiners believe that sanctions are likely to avoid Russian oil as they reduce the number of counterparties and insurance companies for such transactions, but important ones such as Qingdao and Lizao are The port is getting tougher.
People estimated that exports to Russia would fall between 700,000 and 800,000 barrels per day from March. According to Kpler data, this is at least a 70% decrease from January.
I warned
A few weeks before the sanctions were announced in the 27-page document, Indian refiners were warned by authorities and purchased them in advance, industry officials said. The Indian government did not respond to a request for comment on whether refiners were warned in advance.
In China, the Shandong Port Group issued a ban on ships approved for calls at the port three days ago, but it is not clear whether the movement is related.
Other indications the market was anticipating new measures included high demand for African rough meat from buyers in the Middle East and India, followed by rushing to charter vessels, which have increased tanker rates sharply. The trader said.
Adi Imsirovich, director of consultant Sally Clean Energy and former oil trader at Russian Gazprom, said the impact of sanctions could curb Russian exports by up to 1.5 million barrels per day in the short term. I’ve said that.
“The only true prediction we can make is that the market will only become more volatile. Government intervention in the market will only make it more volatile,” he said.
($1 = 7.2870 Chinese Yuan Renminbi)
(Reports by Florence Tan and Nidhi Verma of Singapore in New Delhi, additional reports by Shiiyi Liu and Chen Aitzhu of Singapore, Anna Hertenstein, Alex Lawler, and Ahmad Gadal of London.
