China and India halt Russian oil purchases amid US sanctions – Reuters
Photo: China and India have suspended purchases of Russian oil due to US sanctions (Getty Images)
China and India have halted trade in Russian oil due to US sanctions, which have caused a sharp rise in tanker shipping costs, Reuters reports.
According to traders and shipping companies, trade in Russian oil that was loaded in March has stopped in Asia, as a large price gap between buyers and sellers has emerged in China.
This follows a surge in freight costs for tankers not affected by US sanctions.
Traders report that offers for Russian ESPO Blend crude oil, exported from the Pacific port of Kozmino, have risen to $3-5 per barrel to ICE Brent prices on a delivered ex-ship (DES) basis in China after freight rates for Aframax tankers on the route jumped by several million dollars.
Before the sanctions, strong winter demand and higher prices for competing Iranian oil had driven spot premiums for ESPO Blend crude to nearly $2 per barrel in China - the highest level since the start of Russia's full-scale invasion of Ukraine, which had previously led to discounts of up to $6.
Last week, Bharat Petroleum Corp Ltd’s finance chief stated that the company had not received any new offers for March shipments, as it usually does. The company expects a decline in shipments offered for March compared to January and December.
Last year, Russian crude imports accounted for 36% of India's and nearly 20% of China's imports.
According to analytics firm Kpler, the latest sanctions target tankers carrying around 42% of Russia’s seaborne oil exports, primarily to China. However, these tankers under sanctions have been gradually unloading oil in China and India during the waiver period.
India's Oil Minister, Pankaj Jain, explained to reporters that the US informed India that tankers carrying Russian oil must unload by February 27 in compliance with sanctions. Payments for oil aboard sanctioned vessels must be made by March 12.
US sanctions against Russia
On January 10, the US Treasury Department announced new sweeping sanctions against Russia's energy sector, including the largest oil company, Gazprom Neft, and Surgutneftegaz, to hamper Moscow's war on Ukraine by depriving it of billions of dollars a month.
The sanctions also affect more than 180 vessels and dozens of oil traders, oil industry service providers, insurance companies, and energy sector officials.
According to Kpler, the latest sanctions affect tankers, which account for about 42% of Russia's maritime oil exports, mainly to China.
Reuters reports that the new US sanctions against Russian oil companies are the most extensive restrictions against the energy sector of Russia. It may lose billions of dollars a month.
