Russian oil exports, which fund the Kremlin’s war machine, are finally slowing down. Oil refineries in India – Moscow’s second-largest customer after China since the 2022 invasion of Ukraine – will no longer accept oil tankers owned by Russian state-owned PJSC Sovcomflot due to the risk posed by sanctions, according to Bloomberg, taken by Agerpres.

Since October, the US has tightened sanctions against the fleet of oil tankers that transport Russian oil. Since then, many oil tankers have been decommissioned and ever-increasing volumes of Russian crude are floating in the oceans, according to Kpler analysts.

Together, these developments will gradually reduce Russia’s oil revenues, a key political goal of the United States and its allies.

Despite the sanctions, Russia continued to export huge volumes of oil.

Expert: “Increasing pressure on the export of Russian oil”

While no sharp supply cuts are expected at this stage, the question is how far western authorities will go in tightening the screws, given that the price of crude oil is headed for $90 a barrel and President Joe Biden has embarked on an election campaign where voters are still inflation affects.

“There is increasing pressure on the export of Russian oil, especially to India. We are at a stage where the frictions associated with sanctions are becoming extremely apparent,” said Richard Bronze, director of consultancy Energy Aspects Ltd.

Bloomberg data shows that Russian oil tankers that are under US sanctions are no longer making shipments. The Kremlin is appalled by India’s decision, an important trading ally during the war, to avoid Russian oil tankers. At the same time, Ukraine began bombing Russian oil refineries, although this decision was not well received.

“We are definitely seeing increased pressure from US sanctions on both exports and Russian oil at a time when the US is unable to send more aid to Ukraine and Russia appears to be gaining ground,” says Greg Brew. , Eurasia Group analyst. In New York.

Sovkomflot came under sanctions

Last year, the state-owned company Sovkomflot transported about a fifth of all Russian crude oil supplies. That number appeared to be falling even before refiners in India announced they were no longer accepting oil tankers.

“We expect that oil buyers will be less willing to do business with Sovcomflot than in the past,” said a representative of the US Treasury, adding that these measures should not affect the oil market, as Russia will maintain discounts on the sale of crude oil.

Representatives of Sovcomflot admitted this week that the sanctions have affected the company’s work.

“The attack on Sovcomflot means a significant strengthening of US sanctions against Russia. It will not solve the problem of evasion, but it will increase transport costs and discounts for the sale of Russian crude oil,” said Janis Kluge of the German Institute for International Affairs and Security Affairs in Berlin.

Despite this, Russia can still use a so-called “shadow fleet” created immediately after the 2022 invasion, with old ships without adequate insurance and uncertain ownership. Some estimates put the number at 600.

The cost of delivering Russian oil is huge. According to Argus Media, shipping cargo from the Baltic Sea to China costs about $14.50 a barrel. Sanctions make up more than half of the amount.