Analysis-Latest US sanctions on Russia throw global oil trade into disarray
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Written by Florence Tan and Nedi Verma
SENGAFARA/New Delhi (Reuters) – Moscow has hindered a huge trade in Russian reduced oil to China and India, reviving the demand for the Middle East and Africa, and renewable shipping markets and raising oil prices.
On January 10, Washington’s sanctions targeting carriers of Russian oil in a batch to reduce oil revenues in Moscow more effectively, aim to the aim of the Western sanctions imposed after its invasion of Ukraine three years ago.
The new rules have left millions of barrels floating on ships and sent merchants looking for alternatives, while transactions in Russian crude, the largest source of the most important global importers in China and India, slowed in March.
The stampede has increased market dynamics. For a few weeks, Dubai has become highly expensive than Brent sulfur, which is easy to treat. This opened opportunities for producers from Brazil to Kazakhstan to get a stake in China and India.
The merchants said that the Brazilian crude installments rose last month to about $ 5 a barrel against Brent dated cost and shipping to China, up from about $ 2 in the previous month. This installment is now just less than $ 5 per barrel for May shipments.
In March, China is scheduled to import its first shipment since June 2024 of the CPC mix in Kazakhstan.
In the week following the new penalties, Tuta received the coronary trading of Totalerorergies to the extent that they held tenders instead of special negotiations to sell its raw shippers in the Middle East, which eventually went to CNOC in China and Rongcheng Petrochemicals, traders in Singapore.
Totalenergies did not immediately respond to the comment.
This reflects the rush of the Middle East, and the installments of the standards of the standards of Oman, Dubai and Miraban more than twice in January of December and remain higher than $ 3 a barrel to Dubai, despite the decrease in demand from refineries in seasonal maintenance.
In addition, the Saudi highest source has raised the high prices of Asia crude to the highest level since December 2023, raising the refining costs.
Angolan raw seller said there is an increase in the demand from Asian buyers looking to cover.
“UNIPEC takes a lot of raw goods in West Africa, especially Angolan barrels – a good interest in buying after the new lunar year,” said a Chinese merchant. UNIPEC is the trading arm of the largest colander in Asia Sinopec. Sinopk did not respond immediately to the comment.
With intended ships on the water, many merchants rushed into a transformation into other ships that are now costing several times, adding millions of dollars to the calculation of each shipment.
India escape
The growing costs are especially difficult for refineries in India. At the end of last year, the country has strengthened its transformation from the Middle East sources to purchase more oil from Russia, when the company has concluded the company’s 10 -year offer with the Russian state giant Rosneft at a value of $ 13 billion annually.
The Indian refining sources said that the Minister of Oil in India said that the country’s texture refineries want to buy only Russian oil provided by companies and ships that were not punished by the United States, which actually reduced the number of goods and ships available.
With a limited number of sanctions resistant charges, discounts on Urals Russion Urals Russians narrowed to Brent to $ 2.50-2.90 a barrel for delivery in March, compared to $ 3-3.50 before January sanctions. One million barrels of goods.
Indian refining sources said that the costs of Russian crude have narrowed the price gap with the Middle East crude to about $ 3 per barrel from $ 6 to $ 7 for Indian refineries, which does not provide a great incentive to risk incurring secondary sanctions.
The sources said that the Indian buyers rejected offers from the Russian Sovomflot Giant to receive payments in any currencies, including the Indian rupee, for Russian oil that is shipped on sanctions tankers. week. Sovomflot refused to comment.
The slowdown means that Russian oil stored on the ships has increased by 17 million barrels since January 10, according to the February 5 Memorandum of Goldman Sachs, and is expected to rise to 50 million barrels in the first half of 2025.
“We are witnessing the floating folder capture. There are a number of tankers carrying Russian oil hanging about Shandong and southern ports in China, which are usually significant entry points,” said one of the major executives in a major global trading council.
Shandong County is the center of independent Chinese refineries who were essential buyers of reduced oil from Russia, as well as Iran and Venezuela.
Iran’s output targets
The disruption of the Russian supply is in addition to the decrease in Iranian oil imports by China’s senior customers amid the pressure of the United States, as President Donald Trump recently undertakes to raise oil export in Tehran to scratch.
Goldman Sachs estimated that Iranian floating storage has increased by 14 million barrels since the beginning of the year to its highest levels in 14 months. Analysts said that the enforcement of the most strict sanctions could reduce Iran’s production by one million barrels per day and pushes Brent to a barrel of 80sa in May by May.
The pressure on cheap crude to China, along with poor home demand, has closed many independent refining refineries for maintenance instead of losing 500 yuan ($ 68.62) for each ton of ore treated on the basis of offers of $ 7 from $ 8 per barrel above and said merchant. Ice Brent to China.
Meanwhile, the state’s browser in China is likely to avoid Russian oil as sanctions reduce the number of corresponding parties and insurance companies for such transactions, while the main ports such as Chengdao and Rezau have become stricter.
A person estimates that Russian export volumes to China will decrease between 700,000 and 800,000 barrels per day from March, after the sanctions are eager. This would reach at least 70 % decrease from January, according to KPLER data.
to caution
Industry officials said weeks before the announcement of the sanctions in a 27 -page document, Indian refineries were warned by the authorities and some purchases were submitted. The Indian government did not respond to a request to comment on whether refining refineries had been warned in advance.
In China, the Shandong Port Group issued a ban three days before the ships approved from contact in its ports, although it is not clear whether this step is linked.
The traders said that other signs that the markets were expecting new measures that included high demand for the Middle East and African buyers from Chinese and Indian buyers, and the rush of rented ships, which then prompted the high rates of tankers sharply.
Aydi Emprovic, consulting director Sari Clean and former oil dealers in Russian Gazprom, said the impact of the sanctions may limit Russian exports to up to 1.5 million barrels per day in the short term.
“The only real prediction we can do is that the market will become more volatile. With more and more government intervention in the markets, it will become more volatile,” he said.
($ 1 = 7.2870 Chinese Yuan Renminbe)
(Florence Tan reports in Singapore and Nidi Verma in New Delhi; additional reports by Si Liu and Chen Izho in Singapore, Anna Hirtnstein, Alex Luller, Ahmed Ghaddar in London; edited by Tony Monroe and Sonali Paul)
