Russia’s Oil Trade with India Stalls as Sanctions Drive up Shipping Costs

Singapore : Trade for March-loading Russian oil to Asia, the largest market for Russian crude, has stalled due to a significant price gap between buyers and sellers in China. This disruption follows the imposition of new sanctions by Washington on January 10, which have led to a sharp rise in tanker freight rates. According to traders and shipping data, chartering tankers unaffected by US sanctions has become more expensive, affecting the logistics of Russian oil shipments to China and India.
Russian ESPO Blend crude, typically exported from the Pacific port of Kozmino, saw its prices rise by $3-$5 per barrel over ICE Brent after freight costs for an Aframax tanker soared by millions of dollars. This has created a disconnect between the prices buyers are willing to pay and the price sellers are asking for, leading to halted negotiations.
In India, where Russian oil makes up a significant portion of imports, Bharat Petroleum Corp Ltd’s finance chief confirmed that it had not received any new offers for March delivery. This is unusual, as the company typically receives offers for Russian crude by mid-month. Consequently, the number of cargoes available for March delivery is expected to decrease.

Russia remains a crucial supplier of crude to both India and China, accounting for 36% of India’s oil imports and nearly a fifth of China’s in 2024. However, the sanctions now target tankers that carry about 42% of Russia’s seaborne oil exports, primarily to these two countries. Although a waiver period exists, where sanctioned tankers are allowed to discharge oil in China and India, deadlines are approaching. Indian officials clarified that tankers carrying Russian oil must discharge by February 27, with payments for oil onboard required by March 12.