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Russia faces new sanctions on its energy exports – but this time China and India may not come to Putin’s rescue

  • The upcoming EU embargo on Russian oil products could cause more turmoil in the Kremlin.
  • China and India are unlikely to buy Russian refined fuel previously sold to the European Union, which banned it on February 5.

Russia faces new sanctions against its energy exports, but this time China and India may not come to President Vladimir Putin’s rescue.

The European Union plans to ban the import of Russian refined fuel on February 5, in addition to the embargo on Russian marine crude oil launched in December.

But while China and India have been eager to cut Russian crude supplies, something Europe has shied away from, they are unlikely to buy Russian refined fuel previously sold to the EU.

“They are both net exporters of products, so there is no need to import more,” Victor Katona, Kpler’s senior crude oil analyst, told Insider.

Instead, he added, Russian fuel could find buyers in Singapore and Fujairah in the United Arab Emirates and then go from there to major Asian markets, but not to the big markets.

Catona said Russian products could also flow to West Africa and Latin America, while Europe is likely to start getting more diesel from the US and Asia in a “round of musical chairs”.

China and India produce fuel at their refineries that can also supply Europe. Indeed, the Chinese shipment is already destined for Latvia, According to the Financial Timesdespite the additional time and cost of shipping over these distances.

Additionally, the Russian fuel embargo could give both China and India more room to negotiate what supplies they end up buying, according to Stephen Ellis, energy and utilities strategist at Morningstar.

takes over the fuel market Russian fuel price ceiling. Similar to the oil price ceiling, the European Union and the Group of Seven major industrialized nations plan to block other countries’ access to insurance and freight services unless they commit to curbs on refined products.

EU officials are considering a $100-per-barrel cap on Russian diesel and a $45-per-barrel cap on Russian fuel oil. sources told Bloomberg.

However, Moscow will not be powerless. Katona said Russia could recycle less fuel while maintaining stable oil production, which would lead to more crude exports to India and China.

Ellis said the Kremlin could also “weaponize refined products by cutting off exports.” This will ultimately lead to lower supply to Europe.

China will likely have to use its own products, reducing exports of refined products from China that would otherwise be available to buyers in the European Union,” he said.

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