(Nov 3): Oil supply will be hit by US President Donald Trump’s sanctions on Russia’s two biggest producers, according to the chief executive officers of major energy companies.
The curbs on Rosneft PJSC and Lukoil PJSC, which account for about 60% of Russia’s supply, will delay cargoes and slow down trade, TotalEnergies SE CEO Patrick Pouyanne said at the Adipec conference in Abu Dhabi on Monday. The restrictions are serious and dampening supply, said BP plc boss Murray Auchincloss.
Trump’s restrictions on the two Russian companies, intended to curb the energy revenue that funds Moscow’s war in Ukraine, have already forced India and China to look for some alternative supply. That hasn’t had a big impact on oil prices — which began and ended October near US$65 a barrel.
Still, there’s reason “to be very cautious” about the latest measures, even though previous rounds of sanctions on Russia didn’t cause major disruption to oil supply, Eni CEO Claudio Descalzi said in an interview with Bloomberg TV.
“This didn’t happen in the past years, but now if China and India said that they want to comply, it’s quite different,” Descalzi said.
Indian processors, the top buyers of seaborne oil from Moscow, have been weighing up their options since US authorities blacklisted Rosneft and Lukoil. Now they are preparing for a lengthy hiatus in purchases. There are also signs that Chinese oil refiners are shunning Russian shipments.
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The CEOs of TotalEnergies and BP said they’re not worried about demand growth, echoing comments from Saudi Aramco and the UAE’s energy minister in recent days. Descalzi said any oversupply that emerges next year is likely to be short-lived.
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