Russia Sanctioned, China, India Look to the Middle East

The latest US sanctions on Russian oil have left Chinese and Indian refiners scrambling to find new supplies.

On January 10, the US Treasury Department announced sanctions on two Russian oil producers Gazprom Neft and Surgutneftegas, along with 183 Russian oil tankers, for allegedly preventing the country from profiting from fueling the conflict with Ukraine.

Previously, since 2022, Russia has shifted its trade cooperation and oil transportation to Asian countries, especially China and India, after being imposed sanctions and price ceilings by Western countries.

However, the new US sanctions will seriously affect Russia's oil exports to two major Asian economies .

In the first 11 months of 2024, India's Russian oil imports accounted for 36% of the country's total imports, while China's Russian oil imports accounted for 20% of the country's total imports. Illustrative photo. (Source: Reuters)

Of the 183 Russian tankers hit by sanctions, 143 were carrying 530 million barrels of crude oil, of which more than 500 million barrels were shipped to China, with the rest destined for India, said Matt Wright, a senior shipping analyst at data firm Kpler.

“The new sanctions will significantly reduce the number of crude oil tankers from Russia, pushing up shipping prices,” Mr. Wright said.

The company’s designated vessels are expected to transport up to 900,000 barrels of Russian oil to China per day in 2024, a Singapore-based trader said, but that number is likely to drop sharply after the sanctions.

In the first 11 months of 2024, India's imports of Russian crude oil increased by 4.5% compared to the same period in 2023, reaching 1.764 million barrels/day, accounting for 36% of the country's total imports. Similarly, China's imports of Russian crude oil during the same period, including pipeline supplies, increased by 2%, reaching 99.09 million tons (2.159 million barrels/day), equivalent to 20% of the world's second-largest economy's total imports.

Typically, China mainly imports Russian ESPO Blend crude oil, while India usually buys Urals oil.

Exports of Russian ESPO Blend crude oil will definitely stop if sanctions are strictly enforced, said analyst Emma Li of Vortexa.

Fears of disruptions to Russian oil supplies have pushed global oil prices to record highs. On January 13, Brent crude was trading at more than $81 a barrel.

The new sanctions have forced China and India to return to non-sanctioned oil markets in search of new oil supplies, including the Middle East, Africa and the Americas.

In recent months, spot prices of oil from the Middle East, Africa and Brazil have risen due to higher demand for oil imports from China and India.

“Oil prices from the Middle East are rising. However, we have no choice but to look for oil from the region. We may have to look for more oil supplies from the US as well,” said an official at an Indian refinery.

“Indian refiners, major consumers of Russian crude, are unlikely to sit idly by and look for alternative supplies from the Middle East and the Atlantic basin,” said Harry Tchilinguirian, research director at Onyx Capital Group.

So, according to research director Harry Tchilinguirian, China, a major buyer of Iranian crude, is likely to also shift to buying oil from the Middle East and maximize its ability to import Canadian crude, via the Trans-Mountain pipeline.

Thus, the US sanctions against Russian oil have severely affected the two major customers of Russia, China and India. In order to continue the refining process, in the short term, the two countries must find supplies in a new horizon, which is the Middle East, Africa and the Americas. However, in the long term, this possibility is uncertain, depending on the new policies of the administration of President-elect Donald Trump.

Source: https://baoquocte.vn/nga-bi-trung-phat-trung-quoc-an-do-tim-den-trung-dong-300938.html