The United States will impose some of the harshest sanctions yet on Russia’s oil industry, according to a purported U.S. Treasury document circulating among traders in Europe and Asia that drove global oil prices 3% higher on Friday.
Some 180 vessels, dozens of traders, two major oil companies and some top Russian oil executives, are designated in the sanctions, reports of which pushed global oil prices to close to $80 per barrel..
Reuters could not immediately verify the veracity of the document and the U.S. Treasury Department did not immediately respond to a request for comment.
The sanctions, imposed on Russia for its war in Ukraine, would cause severe disruption to Russian oil exports to its major buyers India and China, four sources in Russian oil trade and three Indian refining sources said.
Washington will impose sanctions on two oil majors Gazprom Neft and Surgutneftegaz and ship insurance providers Ingosstrakh and Alfastrakhovanie that cover most of ships supplying Russian oil to India, Moscow’s biggest oil buyer, the document showed.
Russia has diverted oil and fuel shipments from Europe to Asia after the start of the war in Ukraine in 2022 after the West imposed harsh sanctions on its energy industry, which provides every tenth barrel of global oil production.
Russian companies have adapted by buying their own fleet of tankers and insuring them inside Russia rather than via Western ship insurance.
Until now, hundreds of ships and many Russian oil traders have escaped the harshest U.S. sanctions as the Biden administration sought to strike a balance between the case for tighter sanctions and averting a global oil price rally.
President-elect Donald Trump, who takes office later this month, has promised to stop the war in Ukraine, a task that could be helped by harsher sanctions on Moscow, which depends on oil exports to sustain its economy and fund the conflict.
Indian refiners will refrain from taking Russian oil in tankers under sanctions or in ships insured by Russian insurers that are under sanctions, the Indian refining sources said, asking not to be named.
According to the document, the U.S. Treasury would allow a transition period to March 12, allowing some energy-related transactions to be completed.
One of the Indian refining sources said the impact could be to lower some prices as Russia would cut crude prices to below $60 to allow Western insurance and tankers to be used in line with a pricing cap imposed by the West.
(Reporting by Nidhi Verma and Dmitry Zhdannikov, additional reporting by reporting by Andrea Shalal; editing by Barbara Lewis)