Reuters: China and India halt Russian oil purchases over soaring tanker costs

China and India have stopped purchasing Russian oil scheduled for March delivery due to rising costs of chartering non-sanctioned tankers, Reuters reports, citing traders.  

“Washington imposed fresh sanctions on Jan. 10 targeting Russia’s oil supply chain, causing tanker freight rates to soar as some buyers and ports in China and India steered clear of sanctioned ships,” the report said.  

The price of Russian oil exported from a Pacific Ocean port has risen by $3–$5 per barrel compared to futures contracts of Intercontinental Exchange Brent crude.  

For instance, freight costs for tankers carrying under 120,000 tons on the China route have surged by “several million dollars.”  

Before the recent imposition of U.S. sanctions, growing winter demand and rising prices for Iranian oil had already pushed the cost of ESPO Blend crude – supplied to China – up by nearly $2 per barrel.  

“[…] The highest since the start of the Ukraine war in 2022, the aftermath of which had sent discounts to as deep as $6,” the article notes.  

On Jan. 10, the U.S. introduced its most extensive sanctions package yet, targeting Russia’s oil and gas export revenues. The measures hit two of Russia’s four largest oil companies – Gazprom Neft and Surgutneftegaz – as well as more than 180 tankers suspected of transporting Russian oil in violation of Western sanctions.  

These restrictions have driven up tanker freight costs, prompting some buyers and ports in China and India to steer clear of sanctioned vessels.  

On Jan. 22, U.S. President Donald Trump warned that if Russia refuses to agree to a peace deal in Ukraine, he will have “no other choice” but to impose “high levels of taxes, tariffs, and sanctions” on Russian goods.