Washington has imposed new restrictions on Moscow to affect 400 individuals and legal entities from Russia at once. The block list by US Treasury’s Office of Foreign Assets Control (OFAC) includes the Vostok Oil enterprise (Rosneft's flagship project), branches of mining and metallurgical groups (Norilsk Nickel, Evraz, Mechel). But the key target is LNG projects, which is traditional for the US authorities seeking to defend themselves from potential competitors. New restrictions include the supposed fleet of NOVATEK's Arctic LNG 2 project, as well as the company's trading division in China. This time, sanctions indirectly affected NOVATEK's Yamal LNG plant, both as regards its fleet and shipment sales in China.

The updated OFAC list includes Dubai-based White Fox Ship Management, which, according to the Equasis ship register, owns four Arc4 tankers — North Air, North Mountain, North Sky, and North Way, all of which has also fallen under sanctions. The tankers have been cruising along NOVATEK routes since spring, though used for shipments from the Yamal LNG plant alone. Initially, this group was intended for Arctic LNG 2, but got assigned to the Yamal LNG fleet over the project’s inclusion in the SDN list.

Apart from that, the sanctions include tankers Asya Energy, Everest Energy and Pioneer considered in the market as potential carriers with the Arctic LNG 2 project. Bloomberg even wrote that Pioneer and Asya Energy became the first tankers to accept the project’s fuel on board.

Sanctions pressure has been hindering the national gas liquefaction industry’s development. NOVATEK has postponed construction of the third Arctic LNG 2 plant line (with a capacity of 6.6 million tons), which started back in October 2023 and was planned to be commissioned in 2026. For now, active work has been suspended at least until late 2025, with the launch set to take place in 2028.

But NOVATEK does remain active despite the harsh conditions. On August 17, a platform carrying the second production line was delivered to the installation site, with its production likely to be launched as early as in December, Bloomberg reported referring to ship tracking data. And yet, things with exports from the enterprise has become even more complicated.

The new round of US sanctions also affected the Russian oil fleet, but not the demand for its black gold, as evidenced by the declining Urals discounts. So, sea transportation of Russian oil has been relatively stable altogether. Russian oil exports have been falling slightly, with the amount of fuel leaving key Russian ports down to a 19-month low in July, as Bloomberg claimed. But one has to understand that the reason behind this is not sanctions, but implementation of the OPEC+ deal.

The discount on Urals crude in Russian ports has hit a record low since September 2023, Center for Price Indices data shows. The discount on the ESPO brand is also decreasing.

As of August 23, the discount on Urals against Platts Dated Brent on FOB Primorsk (shipment port), as well as on FOB Novorossiysk, amounted to $12 per barrel. A week earlier, the figures were $12.1 and $12.3 per barrel, respectively. Last time the Urals discount showed such a level was in September last year, and in December 2023 to January 2024 it reached over $18 per barrel. And in some cases, market participants reported a discount of $ 11.5 per barrel of Urals in the port of Primorsk. That on ESPO on FOB Kozmino has been also decreasing — to $3.9 from $4.1 per barrel a week earlier.

The growing "shadow fleet" engaged in transporting Russian oil helps reduce discounts on Russian oil and mitigate the impact of sanctions. The Russian Federation has been increasingly bypassing price caps owing to tankers with non-Western "registration". Moreover, the relevant growth incentive is sanctions imposed by the United States and its allies, a paradox it may seem.

The number of issues is a lot higher as regards the ongoing supplies of Russian pipeline oil to Europe. However, they are no longer a game-changer because of sanctions and halted Druzhba’s northern thread. However, Hungary is trying to revive transit via Ukraine, which has been complicated by Kiev's war actions. Now there seems to be a detente over LUKOIL's blocked oil exports. Two months after it stopped transiting oil through Ukraine via the Druzhba pipeline, a compromise on supplies to Slovakia and Hungary has become feasible. LUKOIL's oil will keep flowing to these countries not by a Russian oil company trader but structures associated with the Hungarian MOL group, the owner of refineries in Slovakia and Hungary. Before the Ukraine sanctions, LUKOIL accounted for more than 40 percent of Russian oil supplies to refineries in Hungary and Slovakia running along the southern Druzhba thread. MOL has offered to take on responsibility for supplying Russian oil through Ukraine, although the Hungarian authorities deem this scheme as more expensive and riskier.