Oil prices tipped downward on Tuesday, a sign traders are still more worried about an oversupplied market than the risk that uncertain Ukraine peace talks mean Russian crude is unlikely to come back into circulation.
Cheaper oil, and the effect of US and European sanctions, are expected to push Russia’s oil and gas revenue down 35% in November compared to that month last year, according to Reuters. Russia’s oil sales to India, which have been a lifeline as Western customers turned away, are now coming at their steepest discount in years and may fall off even more in December, traders say, as Indian refineries seek to avoid coming under secondary sanctions.
At a meeting in Beijing this week, Russian officials pushed a plan to make up the gap by selling more oil and LNG to China. And that’s where the rub for the Trump administration comes in: As long as the US avoids placing secondary sanctions on China, in the interest of maintaining better relations on minerals trading and other issues, the sanctions on Lukoil and Rosneft will mostly be “toothless,” two prominent scholars warned.