International News 15 January 2025
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US tightens sanctions on Russian oil, China and India look for new supplies
In light of the recent sanctions imposed by the US on Russian oil producers and tankers, Chinese and Indian refiners are seeking alternative fuel supplies. The US Treasury Department has imposed sanctions on Russian oil producers Gazprom Neft and Surgutneftegaz, as well as on 183 vessels that have allowed Russia to circumvent previous sanctions and export its oil to global markets. These tankers were transporting approximately 1.5 million barrels of crude oil per day in 2024, accounting for around 1.4% of global oil demand. A significant proportion of these tankers have been utilised to transport oil to India and China, as Western sanctions and price caps have led to a shift in Russian oil trade from Europe to Asia. This strategic move by Chinese and Indian refiners is an attempt to mitigate the impact of US sanctions on their fuel supply.
Kremlin protests, says new US sanctions will disrupt global market stability
The Kremlin has expressed its discontent with the new US sanctions imposed on Russian companies, arguing that they are intended to weaken the position of Russian companies and create an unfair competitive environment. Kremlin spokesman Dmitry Peskov stated that these sanctions would also cause instability in international energy and oil markets. However, Peskov expressed confidence that Moscow would be able to minimise the damage to its economy and that alternative options would emerge if obstacles were created in one place. The US imposed these sanctions in response to Russia's ongoing war on Ukraine, targeting companies such as Gazprom Neft, Surgutneftegas, and Rosatom. In light of these sanctions, refiners in China and India are reportedly searching for alternative fuel supplies.
China-Russia Trade Value in 2024 Hits Record High, Ties Grow Closer
According to Chinese customs data, the value of trade between China and Russia is expected to reach a record high of 1.74 trillion yuan (US$237 billion) by 2024. The value of trade between the two countries denominated in yuan grew by 2.9% in 2024, although this growth was much slower compared to the significant increase of 32.7% in 2023. The imposition of sanctions by the United States on banks conducting business with Russia has resulted in payment barriers in bilateral trade. Russian President Vladimir Putin has emphasised that the primary challenge for trade between Russia and China is the settlement of mutual payments. Shipments of goods from China to Russia increased by 5.0% in yuan terms in 2024, a significant decrease from the 53.9% rise recorded in 2023. Imports from Russia also slowed, with a 1% increase in 2024 compared to an 18.6% expansion in 2023. The total value of China-Russia trade in dollar terms reached US$244.8 billion in 2024, slightly higher than the US$240.1 billion recorded in 2023.
Oil prices close up 2% to highest level in four months on the back of US sanctions
Oil prices rose by around 2% to a four-month high as expectations grew that wider US sanctions on Russian oil would cause buyers in India and China to seek alternative suppliers. Brent crude oil for March 2025 delivery closed at $81.01 per barrel, marking its highest close since 26 August, while West Texas Intermediate crude oil for February 2025 delivery closed at $78.82 per barrel, its highest close since 12 August.Both benchmarks remained in technically overbought territory for a second consecutive day. The premium of front-month contracts over later-maturing futures contracts, known as the time spread, reached its highest level in months due to the recent increase in Brent and WTI prices. This surge in oil prices also led to a rise in the volume of Brent futures and open interest and total futures volume for WTI.