Russia has already lost over 90% of its previous top European market—northern Europe—as shipments have slumped to below 100,000 barrels per day (bpd) in recent weeks from more than 1.2 million bpd before the Russian invasion of Ukraine, according to Bloomberg’s estimates.
The EU embargo on seaborne imports of Russian crude oil and the attached price cap mechanism on Russian crude are set to enter into force on December 5.
Russia has already lost more than 90% of its top market in the runup to February—the buyers in Rotterdam, with shipments to the Dutch hub in the four weeks to November 18 are down to just 95,000 bpd, per Bloomberg estimates.
Around 75% of the Russian crude oil now being loaded at the Baltic ports in Russia is heading to Asia, where Indian and Chinese buyers haven’t shied away from purchasing Russian cargoes, especially earlier this year, at deep discounts.
Now that the EU embargo and the EU-UK-G7 price cap are only two weeks away, signs have started to emerge that buyers in India, for example, are racing to secure supply loading before December 5 and discharging at the port of destination before January 19, which will not be subject to the embargo and price cap.
But buyers in India and China are said to be wary of purchasing Russian oil loading after December 5, waiting for clarity about how the price cap would apply and whether there would be some fallout for buyers of Russia’s crude after the sanctions kick in.
The EU embargo on Russian oil will create huge uncertainties in the global oil and product markets in just a few weeks, the International Energy Agency (IEA) said in its monthly Oil Market Report last week.
Amid signs of weakening oil demand growth, “The approaching EU embargoes on Russian crude and oil product imports and a ban on maritime services will add further pressure on global oil balances, and, in particular, on already exceptionally tight diesel markets,” the IEA said.
“A proposed oil price cap may help alleviate tensions, yet a myriad of uncertainties and logistical challenges remain,” said the agency.
By Josh Owens for Oilprice.com
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