Sanctions Blink, Diesel and Biodiesel Steadies
Yesterday’s much-advertised sanctions D-Day turned into a nothing burger for immediate energy supply. Washington stopped short of the aggressive secondary-sanctions enforcement the market feared, and crude plus products quickly surrendered some geopolitical premium. The risk has been postponed rather than removed. Secondary sanctions against major financial institutions remain threatened as early as Friday, putting China directly in focus because of its purchases of sanctioned crude. Washington is also considering another 7.5 percentage points of tariffs on Chinese goods on top of the 12.5% replacement tariff imposed in July. Canada has answered US trade measures with tariffs ranging from 15% to 50% on C$27.6 billion of US goods effective September 8. This tit-for-tat escalation is negative for trade, logistics and economic activity. Yesterday’s announcement did little. Secondary sanctions that interfere with banking, crude payments and refinery feedstock flows would be another matter entirely.
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