BEIJING- Oil prices slipped at market open on Tuesday but remained near four-month highs as Chinese and Indian buyers sought new suppliers in the wake of the Biden administration’s toughest sanctions yet on Russian oil.
Brent LCOc1 futures slipped 22 cents, or 0.27 percent, to $80.79 a barrel, while US West Texas Intermediate (WTI) crude fell 16 cents, or 0.2 percent to $78.66 a barrel.
That followed roughly 2 percent gains in Monday trading, after the US Treasury Department on Friday imposed sanctions on Gazprom Neft and Surgutneftegas as well as 183 vessels that trade oil as part of Russia’s so-called “shadow fleet” of tankers. The move is expected to cost Russia billions of dollars per month, according to one US official.
“A large portion of Russia’s shadow tanker fleet has been sanctioned, making it more difficult for Russia and buyers to circumvent the G-7 price cap. These sanctions have the potential to take as much as 700,000 barrels per day (bpd) of supply off the market, which would erase the surplus that we are expecting for this year,” ING analysts said in a note.
But the analysts added the actual impact would probably be less as buyers and sellers found ways to continue getting around the sanctions.
Robert Rennie, head of commodity and carbon strategy at Westpac, said the new measures could affect 800,000 bpd of Russian crude exports for “an extended period” and as much as 150,000 bpd of diesel exports.