Skip the oil market: nobody wants Russian oil, even a discounted one
Although Westerners have done their utmost not to hit the Russian energy sector with sanctions, traders are beginning to refuse purchases of oil from Moscow . Acting as if the energy is already hit, traders and refineries are refusing to buy black gold, reports the WSJ . In this way the market comes to jump, because supply and demand do not meet: we have supply, we have demand, but the former does not completely satisfy the latter.
This self-imposed embargo, which effectively stopped most Russian oil shipments, threatens to drive up energy prices globally by removing a drop of oil from a market that was under tension even before the Russian invasion of Ukraine. . Meanwhile, Russia, which needs revenue for the war and to stabilize its financial system, is taking extreme measures to persuade companies to buy its most valuable asset.
We previously reported that oil tanker owners had already begun avoiding Russian ports due to both the military invasion of Ukraine and the fear that sanctions would soon also come for oil, and consequently the tariffs for tankers on the routes. Russian crude oil had exploded nine times in the last few days.
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But now, amid growing fears that they run into complex restrictions in different jurisdictions, refineries and banks are refusing to buy any Russian oil. the fear is that the intensification of the fighting could lead to the extension of sanctions also to oil, also entangling those who are only operating in the sector.
"This will make trading with Russia very complex," said Sarah Hunt, a partner at the HFW law firm that works with commodity traders, of the sanctions set for Monday. "These sanctions against Russia will have an incredible effect on global trade and trade finance."
Brent crude futures, the benchmark in international energy markets, rose nearly 8% on Tuesday, topping $ 105 a barrel. But in a sign that demand for Russian oil has evaporated, the country's flagship Urals crude prices have moved in the opposite direction.
On Tuesday, traders offered Ural Brent at a record discount of about $ 15 a barrel below the Brent price – with the discount at one point reaching $ 18.60 – and even then they didn't find. buyers. A drop in the price of Expo, a grade of Russian crude popular in Asia, suggests that refineries in Japan and South Korea are pausing purchases alongside those in Europe and the United States.
" The market is starting to jump ," a trader from a major commodity trading house told the WSJ, which is a problem because with Russia exporting around 5 million barrels a day, the oil market – already extremely narrow – it could find itself in a historic short supply within days, and it will need a massive demand cut – that is, much, much higher oil prices – to stabilize, Goldman wrote over the weekend.
Oil trading giants including Vitol and Trafigura hold Russian oil purchased on long-term deals. But according to the WSJ, they weren't able to sell it on Tuesday.
In Europe, the Swedish refinery Preem and Finland's Neste Oyj said they had stopped buying Russian oil and replaced them mostly with oil purchases from Northern Europe. Texas-based Valero Energy has also suspended all future purchases of Russian oil.
And while Russia is exporting as much oil for now as it was on the eve of Thursday's invasion, those flows, based on pre-war sales, will slow dramatically in the coming weeks once the cargoes are delivered.
All of this is happening despite the fact that Russia has been given full opportunity to export and oil products are excluded from both the SWIFT blockade and sanctions. Yet, at this time, very few want to take advantage of this opportunity.
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The article Skip the oil market: nobody wants Russian oil, even a discounted one comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/salta-il-mercato-petrolifero-nessuno-vuole-il-petrolio-russo-anche-scontato/ on Wed, 02 Mar 2022 08:00:46 +0000.