Urals oil tumbles to new lows as US Treasury says Russia sanctions work
Russian oil tanker (Illustrative photo: Getty Images)
The US Department of the Treasury says that sanctions on Rosneft and Lukoil have already reduced Moscow’s revenues and are likely to lower Russian oil sales in the long term, according to Reuters.
The Treasury’s Office of Foreign Assets Control (OFAC) stated that its analysis of the initial impact of the sanctions on the market showed they are achieving the desired effect of reducing Russia’s income by lowering the price of Russian oil, and thus its ability to finance military operations against Ukraine.
China and India were the two largest buyers of Russian oil.
The OFAC analysis notes that several key grades of Russian crude are being sold at their lowest prices in years, and that nearly a dozen major Indian and Chinese buyers of Russian crude have announced intentions to suspend purchases for December deliveries.
Data from LSEG Workspace published on Monday, November 17, showed that Urals benchmark crude loaded in Novorossiysk traded at $45.35 per barrel on November 12 - the lowest level since March 2023.
At that time, Russia was only beginning to build a shadow fleet of tankers to bypass the $60 per barrel price cap set by the G7 countries in December 2023.
Sanctions drain Putin’s war machine
Reuters reported in early November that discounts on Russian oil relative to Brent have increased, as major Indian and Chinese refineries reduced purchases in response to US sanctions.
A Treasury Department spokesperson said the sanctions are draining Putin’s war machine and that the department stands ready to take further action if necessary to stop senseless killings in Ukraine, the agency reports.
US sanctions on Russia’s oil giants
In October, the US imposed sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, and 36 of their subsidiaries.
The sanctions aim to pressure Russia’s energy sector and restrict revenues that the Kremlin uses to fund the war and support the economy.
