Two tankers were heading to Russia on Monday expecting to be crammed with Russian crude as a price cap on its oil exports from a coalition of Western countries went into affect.
On Friday, the European Union agreed to cap Russian seaborne oil prices at $60 a barrel, aiming to limit Moscow’s revenues and curb its ability to finance its invasion of Ukraine.
Russian President Vladimir Putin and high-ranking Kremlin officials have repeatedly said that they may not supply oil to countries that implement the value cap.
In comments published on Telegram following the cap being agreed upon, Russia’s embassy in america criticized what it said was the “reshaping” of free market principles and reiterated that its oil would proceed to be in demand despite the measures.
But while Russia is moving forward on its vow to not sell its oil to countries that implement the value cap, it will not be being deterred to find buyers for its oil. The G7 price cap will allow non-EU countries to proceed importing seaborne Russian crude oil, nevertheless it must be sold for lower than the value cap.
Trade intelligence firm VesselsValue, which tracks the trade of Russian oil, told CNBC that there was a considerable decrease in Russian crude as European imports with alternative markets as an alternative being sought out.
“This is anticipated to hold on into December because the strong sanctions begin,” said Peter Williams, trade product manager at VesselsValue. “Russia has potentially found substitute markets for his or her crude with each India and China increasing seaborne imports from Russia.”
Jacques Rousseau, managing director of world oil and gas at ClearView Energy Partners, told CNBC there’s a disconnect between the U.S. Energy Information Administration and OPEC Russian oil production forecasts.
“When comparing 4Q 2022 to 1Q 2023, the EIA projects a decrease of ~1.35 MM bbl/d vs. OPEC’s forecast of a ~0.85 MM bbl/d decline,” said Rousseau. “The magnitude of the quarter-on-quarter Russian oil production decline might be the difference between a worldwide balance shortfall or surplus in 1Q 2023, and whether or not OPEC+ needs to scale back its production targets again.”
MarineTraffic is seeing two empty tankers heading to Russia.
One is the tankers is Minerva Marina, sailing under the Maltese Flag.
The opposite is the Moskovsky Prospect, sailing under the Liberian Flag, and got here directly from Bombay, India.
Vessel traffic and tanker gridlock
AIS data which tracks vessel traffic is showing a lot of tankers within the Black Sea, mainly crude and chemical tankers from Russia that are in transit and have listed various locations as their destinations, including India, the UAE, and China, in keeping with a MarineTraffic spokesperson.
Meanwhile, tanker gridlock is constructing because of this of Turkey demanding tankers have proof of insurance to travel through Istanbul within the Bosphorus Strait.
Diesel exports from Russia to Europe have up ticked barely between October and November. The sanctions on Russian diesel exports begin on February 5, 2023.
“This is probably going because of supply issues and the beginning of the European winter, ” Williams said. “There was a drop in exports because of the beginning of the Russia-Ukraine conflict, which also coincided with the European transition into spring.”
U.S. liquified natural gas to the EU has fluctuated from a high of 11.48 million cubic meters in April to a low of seven.34 million in September 2022, in keeping with VesselsValue.
“The decrease in USA demand after the winter season could have contributed to the increased exports in April and as other countries look to replenish,” Williams said.
Andrew Lipow, CEO of Lipow Oil Associates, told CNBC when Russia decided earlier this 12 months to chop off natural gas supplies to parts of Europe, the U.S. stepped in to fill the shortfall.
“The trend will proceed as Europe builds more LNG import infrastructure and the USA constructs recent natural gas pipelines and LNG export terminals to accommodate increased production,” Lipow said.
