The United States is poised to impose some of its most severe sanctions yet on Russia’s oil industry, according to an alleged US Treasury document circulating among global traders, Reuters reported. The news has already pushed oil prices 3% higher, with Brent crude surpassing $80 per barrel on Friday.
The purported sanctions target 180 vessels, numerous oil traders, senior Russian oil executives, and two major oil companies—Gazprom Neft and Surgutneftegaz. Ship insurers Ingosstrakh and Alfastrakhovanie, which cover most tankers delivering Russian oil to India, are also reportedly included.
The sanctions, in response to Russia’s ongoing war in Ukraine, could severely disrupt Moscow’s oil exports to major buyers India and China.
India and China have become the largest importers of Russian crude since Western nations imposed initial sanctions on Russia following its 2022 invasion of Ukraine. Russia, responsible for 10% of global oil production, has adapted by creating its own tanker fleet and using domestic insurers.
The purported document outlines a transition period until March 12, allowing ongoing energy-related transactions to conclude. However, Indian refiners are expected to avoid using sanctioned tankers or insurance, likely leading to further drops in Russian oil prices, Reuters reported.
“New sanctions could push prices for Russian oil below $60 per barrel,” one Indian refining source told Reuters. This price point would enable Western insurers and shippers to transport Russian oil under the price cap mechanism already established by Western allies.
President-elect Donald Trump, set to take office this month, has vowed to stop the war in Ukraine. Analysts speculate that harsher sanctions could bolster Trump’s leverage in future peace negotiations, as Moscow relies heavily on oil revenues to sustain its economy and fund the conflict.
Interestingly, leading Russian exporters Rosneft and Lukoil appear to have avoided these harsher measures. Combined, Gazprom Neft and Surgutneftegaz export approximately 800,000 barrels per day (bpd) of oil.
Meanwhile, Saudi Arabia, the de facto leader of OPEC, holds an estimated 2 million bpd in spare production capacity. Should sanctions significantly disrupt Russian supply, the kingdom’s role in stabilising global oil markets could prove pivotal.
The US Treasury has not yet confirmed the authenticity of the document.