U.S. sanctions on the global operations of Russian oil heavyweights Rosneft and Lukoil enter into effect today, with some 48 million barrels of Rosneft and Lukoil crude on tankers that will now have to look for new destinations.
Bloomberg reported the figures, citing Kpler data and noting that the cargoes—mostly Urals and ESPO—were loaded on some 50 tankers with an original destination in China and India, but also others without a set final destination. The publication added that this round of sanctions was among the “most aggressive” by the U.S. federal government, adding that if these barrels do not find a new home, they would be stranded for the foreseeable future, or until sanctions are lifted in case of a peace deal with Ukraine.
Still, Bloomberg added that Russian oil flows abroad remain steady, at around 3.4 million barrels daily, despite the looming sanctions.
“Russian export flows are holding up, but it’s not finding its way through to their destinations yet,” Warren Patterson, head of commodities strategy for ING, said, as quoted by Bloomberg. “If that continues and finally backs up all the way, we could start seeing supply falling, which will be a concern to markets.”
In a note this week, Patterson and his colleague Ewa Manthey wrote that Ukraine was unlikely to accept the U.S. peace deal proposal because it was “favorable towards Russia”, yet news outlets reported that President Zelensky had indicated willingness to work with the U.S. government on the peace deal.
The news immediately pushed oil prices lower, the implication being that the latest sanctions may not end up getting enforced for very long. However, it would be wiser to adopt a more skeptical approach, seeing as this is not the first time that President Trump has tried to broker a peace to end the war in Ukraine, unsuccessfully.
By Irina Slav for Oilprice.com
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