Round Twenty: How the New Sanctions Package Will Affect the Oil Industry MarketИзлучина

Expert commentary by Natalia Ivanova, Director of the petrochemical company NAPOR JSC, was published in the regional edition of *Komsomolskaya Pravda – Murmansk*; it focused on assessing the impact of the latest sanctions package on Russia’s oil industry and fuel and energy sector.

The latest—and twentieth—package of restrictions against Russia announced by Western nations will aim to further counter the re-export of Russian oil and shrink the so-called "shadow fleet." However, the primary factors currently shaping the industry are not new bans, but rather internal production agreements and the alternative logistics and supply chains already established. Natalia Ivanova, Director of the petrochemical company Napor, discussed the potential impact of these new restrictions on the oil industry market.

For the fuel and energy sector, 2025 proved to be a year of successive challenges. As early as January, the US imposed a sweeping package of restrictions on the oil and gas industry. The sanctions impacted all participants: major players, oilfield service companies, and petrochemical suppliers alike felt the pressure. Problems began with industry giants, but a chain reaction soon spread to small and medium-sized enterprises (SMEs).

The results were significant: in early 2025, oil and gas company revenues fell by 21.4%. For instance, Rosneft’s net profit for the first nine months of 2025 dropped by more than 70% compared to the same period in 2024.

A 20th sanctions package awaits the industry in early 2026. The primary blow is expected to target not Russian companies directly, but rather third-party entities involved in circumventing restrictions—so-called secondary sanctions. This could involve extending secondary sanctions to companies engaged in the transit, transshipment, insurance, and chartering of vessels linked to Russian oil shipments. The "shadow fleet"—aging tankers operating outside Western service networks—also remains a key focus.

However, the long-term effectiveness of such measures is questionable. The issue is shifting from direct bans to the realm of increased costs and logistical complexities—challenges the industry has already learned to navigate.

The export of oil and petroleum products is a major component of GDP. It is already evident that Russian authorities and companies are acting proactively; when state priorities and economic security are at stake, the government and corporate leadership engage in dialogue.

Consequently, a strategy to mitigate the impact of a new sanctions package has likely already been devised before its implementation. The experience gained during 2022–2023—when the industry faced the most severe restrictions—has enabled the development of resilient operational models.

At the same time, while the impact of sanctions on physical oil production and export volumes can be assessed, the effect remains minimal at this stage. Although there are trends toward declining oil production in Russia, this is driven less by sanctions than by internal agreements and regulatory factors; indeed, OPEC+ deals and domestic production policies are now the primary drivers.

Sanctions pressure has already fundamentally altered export geography and the industry's structure. The actual impact of the latest sanctions packages has cemented the new market architecture that emerged in response to the initial restrictions.

First, supply volumes to historically key European markets have dwindled to a minimum, while China and India have become the primary destinations. This "pivot" to the East is already underway, and new sanctions cannot reverse it; they can only attempt to complicate routes that are already operational.

China has emerged as a key supplier of components. Relying on Chinese chemical raw materials and reagents for petroleum product manufacturing has become the norm. This involves formulation work, product manufacturing, and continuous R&D—developing new formulas and improving existing ones. This supply chain has proven its reliability.

At the same time, exports of Russian oil and gas technologies to "friendly" nations—particularly in the Middle East—are growing, creating a new, stable revenue stream for SMEs in the sector.

Middle Eastern countries are becoming strategic consumers of these technologies. Saudi Arabia, the UAE, and Oman—which operate mature oil fields—are showing increasing interest in Russian oilfield services technologies and chemicals for enhanced oil recovery. When they see a product that is competitive—or even superior to its Western counterpart—they simply draw the logical conclusion. Arab businesses are adept at crunching the numbers.

It is evident that the industry will feel the impact of the new sanctions package as well. Most likely, this latest blow to the Russian energy sector will lead to the following consequences:

• A further rise in transaction and logistics costs. Finding new arrangements for freight, insurance, and settlements will become more difficult and expensive.
• Intensified competition and consolidation within the logistics sector. Only the most agile operators with established connections will survive.
• Minimal impact on physical production and export volumes. These figures will continue to be driven by global demand and decisions made within the OPEC+ framework.

The primary impact of the new restrictions is expected to manifest as a further rise in logistics costs and the need to devise new workflows for documentation and payments. However, established ties with Asian suppliers and partners—combined with countermeasures developed by the state—allow the industry to look to the future without undue pessimism, focusing instead on expanding technology exports to new regions.

The industry’s outlook is one of cautious pragmatism. New sanctions packages—including the 20th—are no longer viewed as an existential threat; instead, they are seen as presenting additional operational challenges that require administrative and logistical adjustments. There is a general understanding that, having weathered 19 previous rounds, the Russian market will not be destroyed by the 20th.