New US sanctions on Russia’s energy sector are reshaping global oil trade, impacting China and India significantly.
Washington: The latest US sanctions on Russia’s energy sector are shaking things up for China and India. These sanctions are changing how oil is traded globally.
On Friday, the US Treasury, along with the UK, announced new restrictions targeting major Russian oil companies like Gazprom Neft and Surgutneftegas. They also hit 183 tankers linked to Russia’s oil trade, which carried about a quarter of Russia’s energy exports last year.
China and India, the biggest buyers of Russian oil, are feeling the pinch. The sanctions are likely to force them to look for oil elsewhere, which could really change the energy market.
Matthew Wright, a freight analyst, pointed out that most of the sanctioned tankers were shipping oil to China. This is expected to push oil prices up, hitting a four-month high recently.
Brent crude oil futures rose to $81.15 a barrel, while West Texas Intermediate futures hit $78. Traders are saying that China and India will have to find non-sanctioned oil from places like the Middle East and Africa.
In the past year, those sanctioned tankers were moving around 900,000 barrels of Russian crude oil to China daily. Now, that number is set to drop significantly.
Even before these sanctions, traders in China and India were already preparing for tighter restrictions on Russian oil. They’ve been increasing their purchases from the Middle East and the Atlantic Basin.
This situation shows how quickly the global energy landscape is changing since Russia invaded Ukraine in February 2022, which led to heavy sanctions against its energy sector.
Interestingly, these developments come just as Donald Trump is set to take office, who has promised to ramp up US energy production and exports.
Russia has been a key supplier of crude oil to both China and India, so these changes are significant.
Analysts are saying that while the sanctions are pushing oil prices up, they might not be a long-term game-changer. The potential for increased US oil supply could stabilize the market, and demand from China has been slowing down.
Goldman Sachs also noted that Russia might respond to these sanctions by offering discounts to keep its oil flowing to price-sensitive buyers.
