Russia faces issues in oil exports after US sanctions
US sanctions disrupt Russian oil exports (Getty Images)
Increasing signs indicate that oil flows to Russia may face disruptions following the intensified U.S. sanctions targeting traders and shipping companies transporting the country's oil, according to Bloomberg.
In the past month, a total of 14 tankers carrying oil to India either stopped, turned around, or disabled equipment reporting their location according to digital tracking systems.
The fate of these ships will be closely monitored by the authorities in Moscow and the West. The U.S. is trying to find a delicate balance between restricting Russia's access to oil dollars and ensuring the preservation of supplies.
Onboard these 14 vessels identified by Bloomberg are 11 million barrels of oil. They were all supposed to head to India, where the government announced a reduction in Russian imports this month, citing insufficiently low prices. New Delhi denied rumors of logistical difficulties in paying Russia. Most of the oil is of the Sokol grade, exported from the eastern part of the country, but some Urals cargoes are also delayed.
Signs of potential problems emerged just a few weeks after the U.S. Treasury Department imposed the most extensive sanctions against Russian oil traders and the state-owned shipping company Sovcomflot since the beginning of the war against Ukraine.
Russia, in response, increasingly relies on clandestine traders and a vast fleet of vessels with undisclosed ownership and insurance to bypass the price cap of the Big Seven, aiming to harm the Kremlin.
Some of the 14 ships appear to have gone out of signal, meaning they may simply be delivering cargo in secret. However, it has been relatively unusual to see tankers involved in the Russian oil trade do this since the war in Ukraine began.
Export to India
Russia has been the biggest supplier of crude to India over the past year, but its imports have plunged since the summer. The Indian government denies that the drop is related to payment issues, instead blaming the high price of Russian barrels compared to other varieties. However, the recent decline occurred after the U.S. signaled it would ramp up enforcement of a price cap and wider sanctions on Russia.
At least one Indian oil refinery had to purchase crude oil from Murban in Abu Dhabi to replace Russian imports.
Western sanctions led to half of Russia's oil and oil product exports in 2023 going to China, while India's share increased to 40% over two years. Europe's share in Russia's oil exports plummeted to around 4-5% from about 40-45%.
