(Bloomberg) -- Refiners, tanker operators and port executives across Asia have been left scrambling to manage the fallout from the most aggressive US sanctions on Russia’s oil industry to date, sifting through documents and quizzing government officials on Monday to understand the impact for major importers China and India.
Most Read from Bloomberg
-
Ambitious High-Speed Rail Plans Advance in the Baltic Region
-
NYC Condo Owners May Bear Costs of Landmark Green Building Law
-
New York, San Francisco Ranked Worst for US Traffic in City Centers
The two countries have been the main beneficiaries of cut-price Russian crude since the invasion of Ukraine in early 2022, working around a Western price cap intended to limit funds flowing back to Moscow. But a step up in punitive measures on Friday — with a range of sanctions targeting producers, insurers and vessels — has thrown that trade into disarray.
Independent refiners in China’s Shandong province, perhaps the most enthusiastic buyers of Russian oil, held emergency meetings over the weekend to try and understand whether they could still take delivery of crude en route when the penalties were announced, traders said.
In India, the oil minister, oil secretary and heads of state-owned refining companies had gathered to discuss the future of the oil and gas sector when the news broke on Friday, according to people who were present. The latest sanctions on Russia, which accounts for about a third of Indian crude imports, overtook the scheduled agenda.
Indian refinery executives say they are still studying the documents with their legal teams. Some said on Monday that they were already bracing for major disruption that could last from three to six months and impact up to 800,000 barrels a day of imports. Government officials, with an eye on inflation concerns, are instead preparing for negotiations with Washington, in an effort to keep discounted crude flowing.
The first concern on all sides is to understand exactly when sanctions come into effect, including when it comes to vessels in transit, and whether a “wind-down” period applies. Chinese and Indian oil executives said they were currently seeking help from legal advisors.
The newly sanctioned tankers handled over 530 million barrels of Russian crude last year, accounting for about two-fifths of the country’s seaborne crude exports, data analytics firm Kpler said. Over half of this volume, or around 300 million barrels, was shipped to China, adding up to roughly 61% of China’s seaborne imports of Russian oil.