Florence Tan, Siyi Liu, Chen Aizhu, and Nidhi Verma of Reuters report that Chinese and Indian refiners are seeking alternative crude supplies as new U.S. sanctions on Russian producers and tankers disrupt shipments. The sanctions have led refiners to turn to oil from the Middle East, Africa, and Brazil, driving up prices. Indian and Chinese refiners are securing more non-restricted oil while shipping activities face complications. Despite the sanctions, some Chinese logistics firms remain less affected due to payment practices in yuan. They write:
Chinese and Indian refiners are seeking alternative supplies of crude as new U.S. sanctions on Russian producers and tankers are set to be the most effective yet in curbing shipments to Moscow’s biggest customers, numerous traders said on Monday.
The U.S. Treasury on Friday imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, as well as on 183 vessels that have shipped Russian oil, as it targets the revenues Moscow has used to fund its war with Ukraine. […]
Global Brent crude futures have also risen. On Monday they climbed above $81 a barrel to their highest since August.
In an early illustration of the impact on shipping activity, five tankers under sanctions have been anchored off Shandong province since Friday, shipping data on LSEG Workspace showed. Another is on the way. […]
Over time, the market is likely to see a growing number of middlemen marketing oil from Gazprom Neft and Surgutneftegaz, and there will be more payments in Chinese yuan via China’s Cross-border Interbank Payment System (CIPS), the executive said.
Also included on Friday’s sanction document were two Chinese oil logistics firms – Shandong United Energy Pipeline Transportation Co Ltd and Guangrao Lianhe Energy Pipeline Conveyor Co – both based in eastern China’s Shandong province, a refining hub and China’s main destination for oil under sanctions.
As these companies mostly transport oil from storage tanks to domestic refiners with payments in Chinese yuan, there would be little impact from the sanctions, the trading executive added.
