Unprecedented Sanctions Target Russia’s Oil Trade
The United States announced sweeping sanctions targeting Russian oil exports, aiming to disrupt its petroleum trade significantly. These measures, introduced days before Donald Trump assumes the presidency, include restrictions on major oil producers, traders, tankers, insurers, and service providers.
Impact on Major Producers: Surgutneftegas and Gazprom Neft
Two of Russia’s largest oil exporters, Surgutneftegas and Gazprom Neft, are now sanctioned, affecting approximately 970,000 barrels per day. These flows represent nearly 30% of Russia’s seaborne exports and exceed the global supply surplus projected for 2025.
Sanctions on Tankers Amplify Disruption
About 160 tankers, including specialized shuttle vessels for Arctic and Pacific operations, have been targeted. This move doubles the number of vessels under US, UK, and EU sanctions, potentially hampering maintenance and complicating Russian oil shipments to China.
Opaque Traders in the Crosshairs
The US also sanctioned traders operating in high-risk jurisdictions with ties to Russia. While some disruption is expected, many trading entities could reemerge under new names, continuing to support Russian oil exports.
Insurance Market Under Pressure
Two key Russian insurers, Ingosstrakh and Alfastrakhovanie, were sanctioned. This action could temporarily exclude Russian tankers from mainstream insurance markets, posing challenges for key importers like India.
US Oil Services Providers Ordered to Exit
American oil service companies must cease operations in Russia by February 27. While domestic providers currently handle most of Russia’s oil services, long-term projects requiring advanced technology, such as Arctic and offshore drilling, may face delays.
Implementation Will Determine Effectiveness
For these sanctions to have lasting impact, the US must enforce measures against Russian oil buyers. Resistance from Indian and Chinese refiners to sanctioned shipments highlights the complexities of enforcement.