(Bloomberg) -- The most aggressive Western sanctions imposed on Russia's oil sector since Moscow's 2022 invasion of Ukraine threaten to disrupt global supply as buyers -- led by China and India -- scour the Middle East for alternative suppliers. Some estimates suggest the measures could halve Russian oil exports and their introduction has driven up Brent futures by as much as $5 a barrel in recent days.
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On Jan. 10 the US Treasury's Office of Foreign Assets Control sanctioned 161 tankers and traders involved in about 2,000 shipments since the invasion began. It also acted against Moscow-based ship insurers and two companies -- Surgutneftgas and Gazpromneft -- which in the first 10 months of last year accounted for almost 30% of Russia's oil exports.
Some vessels have already come to a standstill while others are turning away from the Russian ports they were supposed to collect cargoes from, according to vessel tracking data from Bloomberg News. These erratic movements over the past week are an indication of the impact of the latest round of sanctions, said Edward Fishman, senior research scholar at Columbia University and author of an upcoming book on the use of sanctions as a form of economic warfare.
"It's even likelier that there will be a sustained market disruption," Fishman added. "We could see a meaningful drop in Russian exports."
Oil traders are now asking how meaningful the fall might be?
The 161 tankers affected by the Jan. 10 measures could transport about 1.4 million barrels a day of oil according to an estimate from the London-based EA Gibson Shipbrokers Ltd. That equates to almost half of Russia's seaborne crude exports, vessel tracking by Bloomberg shows. Macquarie Group estimates the impact could be even greater with as many as 2.15 million barrels a day of oil exports potentially lost, driving up prices. The Macquarie figure's almost three times bigger than the global supply surplus predicted by the International Energy Agency for this year.
Additionally, oil grades that require specialist vessels are at risk of a near shutdown if Moscow can't find workarounds, Bloomberg tracking of the sanctioned ships' prior movements shows.
Russia has previously confounded expectations of disruption to its supply. There were widespread predictions that its flows would plunge shortly after the invasion of Ukraine as traditional buyers stepped back. Instead, flows largely held up and despite some fluctuations have done so ever since, partly due to the limited nature of the earlier rounds of sanctions which have been criticized by some.