China and India Stand To Lose From U.S. Sanctions on Russian Oil Trade | OilPrice.com

The United States is set to impose some of the harshest sanctions yet on Russia’s oil industry, Reuters has reported. According to a purported U.S. Treasury document circulating among traders in Europe and Asia, some 180 vessels, several senior Russian oil executives, dozens of traders and two major oil companies are targeted by the sanctions. If enacted, the sanctions would severely disrupt Russian oil exports to India and China–the biggest buyers of Russian crude. The sanctions could also give Trump more leverage in future negotiations as he tries to end the war in Ukraine.

Last year, India briefly overtook China as the largest buyer of Russian crude. However, India’s import of Russian oil in November plummeted 55% Y/Y to its lowest point since June 2022. This could be the result of the country trying to diversify its oil supplies to avoid overlying on a single country. In November, Indian Prime Minister Narendra Modi said during a visit to Guyana that his government views Guyana as key to India’s energy security. Modi told a special sitting of Parliament that he views Guyana as an important energy source and that he will encourage large Indian businesses to invest in the country.

Guyana did not immediately grant Modi’s wish, with India’s External Affairs Minister Jaideep Mazumdar saying talks will continue and that such a deal would ensure “greater predictability.” Guyanese Natural Resources Minister Vickram Bharrat told reporters that Guyana is willing to supply India with a large amount of crude, if Exxon Mobil (NYSE:XOM), the main operator in Guyana’s offshore oil production, agrees to such an arrangement.

“We know Exxon has to do some amount of changes to their lifting schedule and logistics because their preference is for the very large vessels that can accommodate two million barrels mainly because of distance and cost,” Bharrat said.

India’s energy security has been severely compromised by the ongoing Middle East conflict. Whereas a lot of focus lately has been on India’s surging imports of Russian oil, the country actually buys the lion’s share of its oil from the Middle East.

By Alex Kimani for Oilprice.com

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