The global oil market is in turmoil, and Russia is feeling the heat. With a looming U.S. sanctions deadline targeting its state-controlled oil giants, Rosneft and Lukoil, the country’s oil prices are plummeting as its two biggest customers, India and China, drastically cut their purchases. But here’s where it gets even more intriguing: this isn’t just about economics—it’s a geopolitical chess game with far-reaching consequences. Let’s break it down.
By the end of last week, the price of Urals crude, Russia’s primary export blend, had dropped to $36.61 per barrel for shipments from Novorossiysk, according to Bloomberg’s report (https://www.bloomberg.com/news/articles/2025-11-17/russian-oil-plunges-with-top-producers-days-away-from-sanctions) citing Argus Media data. This marks a staggering decline, with the discount compared to the North Sea Brent benchmark widening to $23.51 per barrel—the largest gap since March 2023. To put this in perspective, before the latest U.S. sanctions were announced, Urals crude typically traded at a $12-13 discount. Now, that gap has nearly doubled, inching closer to the record $40 discount seen in early 2023.
And this is the part most people miss: the selloff has intensified as the November 21 deadline approaches, by which all transactions involving Rosneft and Lukoil must cease. Major Indian refiners like Reliance Industries, Bharat Petroleum, Hindustan Petroleum, Mangalore Refinery and Petrochemicals, and HPCL-Mittal Energy have already halted direct purchases from these companies. Collectively, they used to buy around 1 million barrels per day of Russian crude. Similarly, Chinese state-owned refiners Sinopec and PetroChina, along with smaller private plants, have suspended direct buying. This “buyer strike” has impacted nearly 45% of Russian oil exports to China, according to Rystad Energy figures cited by Bloomberg earlier this month (https://www.bloomberg.com/news/articles/2025-11-02/russian-oil-finds-fewer-takers-in-china-after-hit-from-sanctions?srnd=homepage-europe).
The sudden drop in demand has left Russian suppliers with a growing backlog of oil at sea. JPMorgan estimates that around one-third of Russia’s seaborne exports—approximately 1.4 million barrels per day—are now sitting in tankers, effectively turning them into floating storage facilities. As JPMorgan analysts noted (https://www.reuters.com/business/energy/almost-third-russian-seaborne-oil-export-potential-stuck-tankers-jpmorgan-says-2025-11-13/), Russia’s oil exports are entering a new phase of disruption as sanctions take effect, forcing India and China to slash their December purchases.
For the Kremlin, this is yet another blow to its budget revenues, which have already plummeted by more than 20% this year, as reported by Bloomberg in September (https://www.moscowtimes.ru/2025/11/07/u-rossiiskih-neftyanih-kompanii-srivayutsya-dve-treti-postavok-v-indiyu-a179460). Rosneft and Lukoil alone account for about half of Russia’s crude exports, totaling 2.2 million barrels per day. When combined with Surgutneftegaz and Gazprom Neft, which are already under U.S. blocking sanctions, roughly 70% of Russia’s export volumes are now affected.
But here’s the controversial question: Is this a strategic move by the U.S. and its allies to cripple Russia’s economy, or a necessary step to hold Russia accountable for its actions? Some argue that these sanctions are disproportionately harming ordinary Russians, while others see them as a justified response to geopolitical tensions. What do you think?
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