Russian Oil Exports Stay Strong Despite US Sanctions, Says HSBC

Despite new US sanctions in January, Russia’s oil exports remain mostly unaffected, according to HSBC Global Research. The report states, “Russian exports have continued almost as normal despite new US sanctions announced in January.” This suggests that sanctions have had little impact on oil supply.

Minimal Impact of Sanctions on Supply

So far, supply disruptions have not materialized. HSBC notes that most concerns about sanctions have been more noise than reality. Strong trade ties between India, China, and Russia have helped stabilize exports. As a result, any supply issues are likely to be temporary.

Oil Prices Drop as Supply Remains Strong

Oil prices have fallen to around $70 per barrel in recent weeks. A steady global supply and economic worries have pushed prices lower. Analysts expect Brent crude to average $73 per barrel in 2025 and $70 per barrel in 2026. Due to weak demand, prices could drop even further.

Economic Slowdown Increases Risk of Lower Prices

If global economic activity slows, demand for oil may weaken further. US tariffs could worsen the situation. HSBC warns that risks are leaning toward the downside. While OPEC+ can limit price hikes by controlling supply, it lacks a mechanism to stop prices from falling.

If Brent crude drops to the mid-$60s per barrel, OPEC+ may reconsider its decision to ease production cuts. However, for now, supply remains strong, keeping prices under pressure.

Overproduction Further Stabilizes Supply

Several oil-producing nations have exceeded their quotas, adding more oil to the market. Kazakhstan, the UAE, Venezuela, and Libya have together contributed 0.4 to 0.5 mbd (million barrels per day) in February.

Additionally, if the Iraq-Turkiye pipeline reopens, it could add another 0.4 mbd to the global supply. Some risks, such as potential disruptions in Venezuela or Iran, still exist. However, so far, most sanctions-related concerns have had little real impact.

HSBC’s Oil Market Outlook

HSBC predicts a slight oil surplus of 0.2 mbd in 2025. If OPEC+ continues its planned production increases, this surplus could exceed 1 mbd in 2026.

The report states, “We believe risks are asymmetrically skewed to the downside in the current market regime. On the upside, prices remain firmly capped by OPEC+ spare capacity. There is no equivalent mechanism to underpin the downside—quite the opposite, as OPEC+ is set to restore rather than cut supply.”

It also warns, **”Prices could fall if global trade and economic activity deteriorate, notably due to US tariffs. If Brent slides to the mid-USD60s/b, we would not rule out OPEC+ pausing the unwinding of its output.