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US sanctions strain Russia’s oil exports as shipping costs surge, Bloomberg reports

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US sanctions strain Russia’s oil exports as shipping costs surge, Bloomberg reports
Oil pumping jacks, also known as "nodding donkeys," at a Rosneft Oil Co. oilfield near Sokolovka village, in the Udmurt Republic, Russia, on Nov. 20, 2020. (Andrey Rudakov/Bloomberg via Getty Images)

Russia is facing a significant oil transportation crisis due to recent U.S. sanctions, according to Bloomberg oil strategist Julian Lee.

On Jan. 10, the U.S. Treasury sanctioned 161 oil tankers involved in transporting Russian crude, adding to a series of measures imposed by the Biden administration. These restrictions, which U.S. President Donald Trump has yet to relax, have already caused a sharp increase in shipping costs for Russian oil exports.

The impact of these sanctions is evident in the rising cost of securing tankers to transport Russia’s Urals crude to Asia. Data from Argus Media shows a nearly 50% surge in freight rates since the measures took effect. The difference between the price of Russian oil at export and its delivered price in Asia — an indicator of shipping costs — has also spiked.

The number of sanctioned vessels has now reached 265, with U.S. blacklisting proving to be the most disruptive. Of the 435 ships that transported Russian crude in 2024, 112 — or 26%— are now under Washington's sanctions, according to Bloomberg.

When vessels sanctioned by the EU and U.K. are included, the figure rises to 37%. However, given that 80% of these tankers carried multiple shipments, the affected vessels were responsible for 57% of Russia's total seaborne crude exports last year. This presents a significant logistical hurdle for the Kremlin as it struggles to secure alternative shipping options.

The growing restrictions on Russia's so-called "shadow fleet" mean the country must find new ways to sustain its oil export volumes. Some sanctioned ships have already encountered delays, either idling near Russian ports or waiting outside Chinese terminals instead of completing deliveries. Others have been used to transfer cargo to larger storage vessels near Russia's coastline.

Freight costs have already surged, with the expense of shipping a barrel of Russian crude from the Black Sea to India now at $10, while transport from the Baltic costs as much as $13 per barrel. While these rates are not yet at the peak levels seen after the initial G7 price cap, they have jumped by 48% since Jan. 10.

With Russian oil shipments becoming increasingly difficult, the country's ability to maintain its export levels may come under serious strain. If the recent shipping bottlenecks continue to expand, the sanctions could deal a severe blow to Russia's energy trade, exacerbating its economic challenges.

Russian oil sales to China and India stall as sanctions increase costs, Reuters reports
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.
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Olena Goncharova

Head of North America desk

Olena Goncharova is the Head of North America desk at The Kyiv Independent, where she has previously worked as a development manager and Canadian correspondent. She first joined the Kyiv Post, Ukraine's oldest English-language newspaper, as a staff writer in January 2012 and became the newspaper’s Canadian correspondent in June 2018. She is based in Edmonton, Alberta. Olena has a master’s degree in publishing and editing from the Institute of Journalism in Taras Shevchenko National University in Kyiv. Olena was a 2016 Alfred Friendly Press Partners fellow who worked for the Pittsburgh Post-Gazette for six months. The program is administered by the University of Missouri School of Journalism in Columbia.

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