Russia loses 60% of its seaborne crude oil market in Europe

Russia loses 60% of its seaborne crude oil market in Europe

Bloomberg reports:

Russia has lost three-fifths of its seaborne crude sales in Europe since Moscow sent troops into Ukraine in February. That market is going to vanish almost completely eight weeks from now and the latest sanctions will make it very difficult to divert flows elsewhere.

Crude shipments to Europe averaged 630,000 barrels a day in the four weeks to Oct. 7, down from 1.62 million before the invasion. Tankers carrying Russia’s oil are now forced to spend four times as long making each delivery to India as they would previously have done shipping a cargo to the Netherlands, or 10 times as long as it would have taken to get to Gdansk in Poland.

The European Union’s latest round of sanctions, passed in response to President Vladimir Putin’s annexation of parts of Ukraine, include a ban on shipping Russian crude anywhere in the world on EU tankers — an escalation that could greatly increase the impact on seaborne flows. The sanctions have also been revised to incorporate a price cap championed by the US Treasury under which, from Dec. 5, buyers of Russian crude could use European ships, insurance and other services, but only if the price they pay is below a certain threshold.

Russia has said it won’t sell its oil to anyone who imposes a price cap, warning that its introduction could lead the country to cut production, and its major customers remain unlikely to endorse the plan. Still, the existence of such a mechanism is expected to boost the bargaining power that key customers China, India and Turkey have over Russia for future purchases. [Continue reading…]

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