Sanctions imposed on Russia appear have reportedly stemmed the flow of letters of credit (L/Cs) for Russian oil exports.

The US imposed sanctions on Russia that restrict letter of credit (L/C) transactions with four of the country's largest financial and energy companies (DC World News, 21 July 2014)..

Weak differential

Analysts at independent oil and gas research company, JBC Energy, say that Russia's ESPO crude blend now trades at its weakest differential to Dubai crude.

Russia's ESPO crude determines the key compensation rate for Russian oil production while Dubai crude is the benchmark it is most commonly compared with.

Market withdrawals

The JBC Energy analysts said in a note that that there are legitimate fundamental reasons for the weakness, but also point out that some regular ESPO customers appear to be missing from the market.

The analysts also say that as a result if US sanctions,Japanese refiners have reportedly stopped taking part in spot tenders from certain Russian suppliers.

L/C refusals

Japanese companies that regularly take ESPO Blend have failed to bid for five September-loading cargoesas banks reportedly refused to issue L/Cs for trades with Rosneft Oil Company.

All except new equity transactions are also prohibited with Rosneft and another Russian energy company, OAO Novatek.

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