The new sanctions on Russia’s oil sector by the US will disrupt Russia’s oil exports, create supply challenges and impact India’s imports from Russia, according to a report by Morgan Stanley.

The US sanctions impose restrictions on two major Russian oil producers–Gazprom Neft and Surgutneftegaz–as well as 157 tankers, insurance companies, oilfield service providers, and traders. These tankers transported approximately 1.5 million barrels per day (mb/d) of crude oil and 0.2 mb/d of refined products in 2024, with more than 85% of this were destined for China and India.

India, a significant buyer of discounted Russian oil, may face challenges in securing shipments due to restrictions on tankers and insurance providers.

What Else Did Morgan Stanley Said?

Morgan Stanley mentioned, “With most Russian oil redirected to China and India, this grew to ~140 billion tonne-miles per month in the last few years. As far as we can see, the 157 tankers that are now sanctioned provided 25-30 billion tonne-miles/month of this. With reduced access to tanker capacity, Russia’s seaborne exports may indeed be impacted.”

Russian crude accounted for 40% of India’s oil imports during 2024, following the sanctions-induced redirection of imports from Europe to Asia. The new sanctions could complicate logistics, disrupt supply chains, and potentially increase costs for Indian refiners.

However, Vortex data suggests that new sanctions will only have short-term disruptions to Russia’s oil exports, as sanctioned tankers account for only 25-30% of Russia’s seaborne oil exports.
But, experts caution that the current sanctions will have a significant impact on tanker availability and export logistics for exports to Asia.

The Brent Crude price, which recently approached USD 80 per barrel, may rise further due to supply uncertainties. Analysts predict a tighter oil market in 2025, with potential price increases if OPEC+ maintains its production levels and Russian exports declines.

The full impact of the sanctions will take time to materialize, but their implications for global energy markets and India’s oil imports are significant. The government and industry stakeholders will need to adapt quickly to ensure energy security and price stability in the face of these evolving challenges.