China and India have halted purchases of Russian oil due to a sharp increase in transportation costs following the introduction of new U.S. sanctions. TSN reports. This information was provided by Kontrakty.UA.
The publication Reuters reported this.
The sanctions, which were implemented on January 10, caused freight rates for tankers not subject to restrictions to rise significantly. This led to a considerable price gap between buyers and sellers in Asia.
Oil offers increased after freight rates rose on the route from the Kozmino port, making trading unprofitable for buyers. In China, the price of Russian ESPO Blend oil increased by $3-5 per barrel.
"Freight rates for Aframax tankers on the route sharply increased by several million dollars," the report states.
Sustained demand for oil during the winter and rising prices for competitive grades, particularly from Iran, have pushed up the spot premiums for ESPO Blend oil to China. They reached nearly $2 per barrel — the highest level since the onset of Russia's full-scale war against Ukraine, which had triggered discounts of up to $6 per barrel.
The Chief Financial Officer of Indian company Bharat Petroleum Corp Ltd recently stated that the company has not received new offers for March oil deliveries. The number of shipments for March is expected to decrease compared to previous months.
In 2024, India imported 36% of Russian crude oil, while China accounted for about 20%. However, the new sanctions targeting tankers carrying Russian oil may alter this situation. According to analytics firm Kpler, the sanctions cover tankers transporting 42% of Russia's maritime oil exports, primarily to China.
The U.S. informed India that tankers carrying Russian oil must offload their cargo by February 27 under the sanctions, Indian Oil Minister Pankaj Jain told reporters on Friday. He also noted that payments for oil on board sanctioned vessels must be completed by March 12.
Experts have explained how U.S. sanctions have impacted Russian-Chinese oil trade.