Latest US sanctions could hit Russia oil supply – IEA
Tom Brown
15-Jan-2025
LONDON (ICIS)–The latest tranche of US sanctions on Russia’s oil trade could affect flows from the country, while weather-related production shut-ins in North America could also impact global supply, the International Energy Agency (IEA) said.
Announced on 10 January, the US imposed aggressive new sanctions on Russia’s oil trade, naming 183 vessels, including Russia-owned tankers and the ”shadow vessels” understood to be utilized to evade trade blockades.
The shadow fleet refers to ships indirectly owned or controlled by Russia through shell companies or intermediaries to evade detection and sanctions.
Over 100 of the sanctioned tankers had transported Russian crude to China and/or India in 2024, according to Matt Wright, lead freight analyst at data and analytics firm France-based Kpler.
“When it comes to buyers, China and India, in general, tend to steer clear of dealing directly with tankers and entities blacklisted by the US Treasury,” he said in a note earlier this week.
US moves “may affect oil supply flows” the IEA said in its latest oil market report, but official purchases of Russia crude will still be possible at certain price points.
“Exports on non-shadow tankers remain viable for Russian oil purchased below price caps,” the IEA said.
Further complicating the early 2025 supply picture is scope for production constraints in the US in the event of extreme weather, with a winter freeze last year cutting output in the US and Canada by over 1.8 million barrels/day.
A smaller drop is expected this year, but there could still be scope for weather in the region to tighten supplies, the IEA said.
Potential for additional US sanctions on Iran-origin oil to be introduced by the new administration could also hit global supplies, the agency added, with sentiment already driving some players to pill back from oil supplies from Iran and Russia.
“There is heightened speculation that the incoming US administration will take a tougher stance on Iran’s oil exports, compounding the impact of US Treasury sanctions on Tehran,” the IEA said.
1.5 million barrels day of additional supply is expected from non-OPEC countries this year , and total output growth of 1.8 million/barrel day against 1.05 million barrels/day demand growth, according to the agency.
While supply growth is likely is likely to be sufficient to cover demand, the fresh Russia sanctions could provide more headroom for OPEC+ signatory countries to release more barrels into the market after delaying the end dates for some production cuts.
OPEC, also releasing its latest market predictions on Wednesday, left 2025 demand growth forecasts unchanged at 1.4 million barrels/day, and non-OPEC+ supply growth projections at 1.1 million barrels/day amid global GDP expansion of 3.1%.
The cartel projects that demand and non-OPEC supply growth will remain around 2025 levels next year.
Focus article by Tom Brown
Thumbnail photo: An oil pipeline running through Alaska, US (Source: Shutterstock)
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