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Rosneft and Lukoil account for around two-thirds of the 4.4 million barrels of crude Russia exports each day, according to David Fyfe, chief economist at the Argus media consultancy. | Olga Maltseva\/AFP via Getty Images<\/p>\nThe sanctions threaten to take out \u201chalf\u201d of those supplies, he said, given the measures prevent the two firms from selling their cargoes in dollars, the currency used almost exclusively for trading crude internationally.<\/p>\n
For Lukoil in particular, the sanctions \u201cwill hurt significantly,\u201d said one former executive at the company, who was granted anonymity to speak candidly about sensitive matters. The firm will likely have to sell its stakes in overseas projects from Egypt to Iraq, the person said, hitting up to 20 percent of its revenue.<\/p>\n
But the majority of Chinese and Indian buyers, Russia\u2019s two largest oil trading partners, are likely to continue importing from Moscow, said Homayoun Falakshahi, head of crude oil analysis at the Kpler commodities firm, given its cheaper prices and limited alternatives in the case of China.<\/p>\n
Rosneft and Lukoil account for around two-thirds of the 4.4 million barrels of crude Russia exports each day, according to David Fyfe, chief economist at the Argus media consultancy. | Olga Maltseva\/AFP via Getty Images<\/p>\n
After an initial period of hiatus, \u201cmost buyers would go back into buying,\u201d he said, once they have found workarounds including purchasing cargoes via companies that obscure their Russian ownership.<\/p>\n
\u201cThis will complicate exports and trade,\u201d said Vladimir Milov, a former Russian deputy energy minister-turned-Putin critic. But \u201cthese companies … already have alternative work schemes in place, so there will be damage but it\u2019ll be limited.\u201d<\/p>\n