Despite market challenges, Russian oil continues to flow unabated
Despite sanctions on Russian banks and Russian shipping, a trend of ‘self-sanctioning’ by Western companies, and a new war risk designation for all Russian waters, crude oil continues to pour in in volume huge from Russian loading terminals. The final destination may have changed, but Russian energy exporters are now loading as much oil as they did before the Ukraine invasion, according to Bloomberg.
Last week, Russian maritime crude exports averaged four million barrels a day, the highest pace on record this year, Bloomberg reports. However, many tankers carrying these cargoes do not broadcast their destinations. Some of the shipments from Russia’s western ports appear to be heading towards the Cape of Good Hope, bound for Asia. This is a much longer delivery route than the traditional trade pattern for western Russian crude oil, which is usually sold on the European market. In Russia’s Far East, shipments of the Sokol blend on Sakhalin Island – within easy reach of East Asian buyers – are reportedly sold out until May.
According to trade sources, Russian oil is selling at an unheard of discount of up to $30 a barrel below Brent. That’s 20-30% less than the going rate at a time of sky-high oil prices, and it’s proving to be a tempting offer for buyers outside of Europe. India – which has a long arms-trading relationship with Russia – has increased its purchases of Russian crude oil, and commodities firm Kpler reports that Indian buyers have bought around six million barrels since early March. . The hike is enough to get the White House’s attention: US President Joe Biden held a call with Indian Prime Minister Narendra Modi on Monday to make it “very clear that it is not in their interest to raise this,” the White House said. said the spokesperson.
Although it has a political price, the continued flow of Russian crude oil may provide a short-term benefit to the global economy. According to US Treasury Secretary Janet Yellen, a total ban on Russian oil exports would send energy prices skyrocketing and impact the economies of America’s allies in Europe.
“Our goal from the beginning has been to impose maximum pain on Russia, while protecting to the best of our abilities the United States and our partners from undue economic harm,” she told the week. last to the House Financial Services Committee. “Unfortunately, many of our European partners remain heavily dependent on Russian natural gas, as well as oil, and they are determined to break free from this dependency as soon as possible.”