Russian oil sales to China and India stall as sanctions increase costs, Reuters reports
Trade for March-loading Russian oil in China and India has stalled due to soaring shipping costs triggered by U.S. sanctions introduced on Jan. 10, Reuters reported on Jan. 28.
The sanctions target nearly 200 vessels in Russia's "shadow fleet," major oil companies, and associated entities, significantly complicating Moscow's crude exports.
The disruption has led to stalled trade in Russian crude loaded for March delivery as rising shipping costs created a significant price gap between buyers and sellers, according to Reuters.
Offers for March ESPO Blend crude from Russia's Pacific port of Kozmino have jumped to premiums of $3–$5 per barrel over ICE Brent on a delivered ex-ship (DES) basis to China, following a sharp surge in Aframax tanker freight rates by millions of dollars.
Before the new sanctions, demand for Russian ESPO Blend crude was robust, with spot premiums rising to nearly $2 per barrel due to firming prices for competing Iranian grades and winter demand.
India is also seeing a decline in Russian oil offers. Bharat Petroleum Corp Ltd reported that no new offers for March deliveries have been received, with expectations for a drop in cargoes compared to January and December. Last year, Russian crude accounted for 36% of India's imports and nearly 20% of China's.
Adding to the strain, Indian banks have blocked payments for Russian oil imports following the latest U.S. sanctions, Energy Intelligence reported.
U.S. President Donald Trump warned Russia on Jan. 22 to "make a deal" to end the war in Ukraine, cautioning that continued resistance would result in additional sanctions, tariffs, and taxes on Russian goods.
Tom Keatinge
