July 6, 2022

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The Ukraine war is transforming global oil markets

The Ukraine war is transforming global oil markets

LONDON (Reuters) – The Russo-Ukrainian war has reshaped the global oil market, with suppliers from Africa stepping up to meet European demand, while Moscow, tumbling under Western sanctions, is seeking to make greater use of risky ship transfers. Raw to Asia. The change in these routes reflects the huge change in the supply side of the global market for the crude oil trade since the American shale oil revolution changed the shape of the market a decade ago, and indicates that Russia can avoid an oil embargo. Asian countries, especially China, are buying their raw materials so that the EU can impose it if it continues. Sanctions imposed on Moscow after the war in Ukraine in February, including a US import embargo, prompted Russia to export more discounts from Europe to buyers in India and China, according to industry and trade data. According to data from the Paris-based International Energy Agency, Russian exports returned to pre-Russian military levels in April, and oil prices remained close to $ 110 a barrel, a 14-year high of $ 139. In March.

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Analysts say that even if the EU agrees to an oil embargo in the next round of sanctions against Russia, Asian demand could offset the impact of the embargo. “We do not expect the supply gap to widen or prices to rise unless Western countries put diplomatic pressure on Asian buyers,” said Norbert Rucker of the Jules Beer Group. Complex and tangled sanctions imposed on Moscow by the United States, Britain and the European Union have prevented Russian-owned or Russian-flagged vessels from entering ports, meaning that some of Asia’s increased trade is done through shipping. At sea, a costly and relevant process, raw leakage risks. Overall, according to Tanker Tracker Petro-Logistics and other data, Russia’s maritime oil flow to Asia has risen by at least 50 percent since the beginning of the year. Ship-to-ship cargo transfer, which represents a small percentage of maritime trade, was diverted from the Danish coast to the Mediterranean Sea to avoid obstacles and objections.

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“Ship-to-ship exchanges are common in the Danish seas at the entrance to the Baltic Sea,” Mark Gerber, head of petro-logistics, told Reuters. Average heat and favorable. “Gerber estimates that the volume of Russian crude and oil carried from one ship to another in the Mediterranean is about 400,000 barrels a day, most of which goes to Asia, plus 2.3 million barrels a day directly before the attack. About 1.5 million barrels per day went directly to Asia.

Shipping charges

Traders claim that Russian crude oil is loaded on Aframax or Swissmax ships carrying less than a million barrels, and that shipping at large to ships with a capacity of two million barrels reduces shipping costs. Maritime exports account for only a fraction of Russia’s total exports. According to the International Energy Agency, total Russian exports of crude and its products, including those carried by pipelines, have risen to just eight million barrels a day. In exchange for Russian crude oil, European refineries switched to importing ore from West Africa. According to petro-logistics data, those imports increased by 17 per cent in April compared to the average from 2018 to 2021.

European demand

Icon data shows an increase, with 660,000 barrels a day arriving in Northeastern Europe from Nigeria, Angola and Cameroon in May, of which Nigeria’s three crude oil exports, compared to one export in February. Meanwhile, Gerber said West African crude exports to India halved, sending 280,000 bpd in April, up from 510,000 bpd in March, while New Delhi converted to Russian crude. Traders say Nigeria’s low light, sulfur crude oil prices have risen to record highs as European demand has increased.

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According to Petro-Logistics, deliveries from North Africa to Europe have increased by 30 percent since March. Of these, exports from the Egyptian port of CDCerreal to northwestern Europe nearly doubled to more than 400,000 barrels a day in May, analysts say. The United States also increased its supply to Europe. Kepler said European crude oil imports from the United States in May were up more than 15 percent since March, the highest monthly increase on record. In addition, Europe exports about 1.45 million barrels of crude oil a day from the United States.