Sanctions Bite: Russian Oil Industry Feels the Pressure
Since the beginning of October, the United States has intensified sanctions against a broad fleet of tankers transporting Russian oil, resulting in dozens of sanctioned tankers sitting idle.
This development has significant ramifications for Russia’s oil industry.
Russian oil is now starting to feel the impact of sanctions as tankers belonging to the state-owned Sovcomflot have ceased to deliver to all Indian refineries.
Dozens of vessels affected by sanctions have been unable to load cargoes, affecting Russia’s oil export apparatus, which finances the Kremlin’s activities in Ukraine.
While a sharp reduction in shipments is not expected at this stage, the extent to which Western regulators will tighten the screws remains uncertain, particularly as oil prices edge towards $90 per barrel.
The costs of shipping Russian oil are substantial. According to Argus Media, transporting cargo from the Baltic Sea to China costs around $14.50 per barrel, with more than half of this amount attributed to sanctions-related expenses.
Moreover, Ukrainian drone attacks on Russian refineries are further denting Russia’s profits.
Earlier reports indicated that approximately 600,000 barrels of daily refining capacity in Russia were disabled due to strikes by Ukrainian drones on Russian refineries.
Russia, traditionally a major player in the global energy market, now finds itself grappling with a confluence of challenges, from sanctions-induced disruptions to technological vulnerabilities in its infrastructure.
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