An Aframax tanker carrying Russian crude to India has reversed course soon after leaving the Russian coast and is currently idling in the Baltic Sea, Kpler has reported, as cited by Bloomberg. The crude on board comes from Rosneft, which the U.S. sanctioned a week ago.
The data, from Kpler and Vortexa, shows that the Furia loaded around 730,000 barrels of Urals crude in Primorsk on October 20 and set off for the Indian port of Sikka, which Reliance Industries and Bharat Petroleum use to receive foreign oil cargos. Arrival time was estimated as mid-November, Bloomberg reported, citing unnamed Indian energy industry executives as saying they expected a wind-down in new Russian oil orders.
The latest U.S. sanctions specifically targeted, among other entities, two of Russia’s biggest oil exporters, Rosneft and Lukoil. Together, the two account for about half of Russia’s total oil exports or some 2 million barrels daily. Companies doing business with the two have until November 21 to wind that business down. Lukoil, meanwhile, said this week it was going to sell its overseas business following the sanctions.
As regards the effectiveness of the sanctions, the general sentiment among industry observers appears to be one of skepticism. Kpler, for instance, said that the sanctions on Rosneft and Lukoil would lead to a disruption in oil flows over the short term but would fail to cause structural change in oil markets.
“ A major disruption to Russian crude exports appears unlikely, as the imposed measures are not secondary sanctions. Purchases by non-US entities — such as Indian, Turkish, or Chinese refiners — directly from Rosneft remain legally permissible,” Kpler said.
Others noted the potential of effective sanctions to lead to much higher oil prices, which would be bad news for large importers in the West.
“They are trying to thread a needle. They have clearly been given instructions not to blow up the global economy, so that does mean they are going to be using sanctions against third or fourth league targets,” Richard Nephew, a former senior U.S. State Department official, told the Wall Street Journal this week. “Based on what we have seen so far, they are basically doing a signaling operation with the hope of inflicting some damage.”
By Irina Slav for Oilprice.com
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