Sanctions, stranded tankers push Russian oil to record low

Russian oil prices have fallen to their lowest level since the start of Moscow’s full-scale war against Ukraine, driven by tighter Western sanctions and a decline in global oil prices, Bloomberg reports.

Mounting sanctions pressure is increasingly complicating the sale and transport of Russian crude, affecting key buyers’ refineries in countries such as India. As a result, Russian exporters are offering steep discounts to secure buyers.

Argus Media estimates that the average price of Russian oil exported from Baltic and Black Sea ports, as well as from the eastern port of Kozmino, stands at just over $40 per barrel—28% lower than the average over the previous three months. Prices have also faced additional pressure following recent sanctions targeting Rosneft and Lukoil.

Global oil prices are declining alongside Russian crude. On December 16, benchmark oil prices fell below $60 per barrel for the first time since May. Analysts warn that the drop in oil revenues poses serious risks to Russia’s budget, as income from oil and gas exports accounts for around a quarter of state revenues and is crucial for financing the war.

In October, the United States imposed sanctions on Russian oil giants Rosneft and Lukoil, along with 36 of their subsidiaries, in an effort to pressure the Kremlin toward negotiations over Ukraine. The sanctions caused the market value of both companies to plummet, forcing them to begin selling off foreign assets.

China’s largest state-owned refiners have suspended purchases of ESPO crude in response to the sanctions, and India has adopted a similar stance. According to media estimates, approximately 48 million barrels of Russian oil may now remain stranded at sea, leaving dozens of tankers searching for alternative ports to unload.

The combined impact of sanctions and weakening global demand highlights the growing financial strain on Russia’s oil sector, with potentially far-reaching consequences for the Kremlin’s war funding and broader economic stability.

By Vafa Guliyeva