Crude oil prices are rising as China slows its zero Covid-19 policy. The market’s momentum was further aided by the stoppage of the Keystone pipeline due to an oil leak. Brent crude surpassed $80 per barrel earlier today, while West Texas Intermediate touched $75 per barrel.
Since the commencement of the Ukraine crisis, Russia’s crude oil shipments to India have surged 14-fold, while exports to China have more than quadrupled, with Russia finding new clients to fill the hole left by European purchasers.
Because of the Russia-Ukraine conflict, which began on February 24, the United States and the United Kingdom agreed to suspend Russian oil shipments. The European Union (EU) agreed to put an embargo on seaborne imports of Russian crude oil beginning December 5, the same day as the EU and G7 agreed to place an oil price cap of $60 per barrel of Russian crude.
The embargo on petroleum goods will go into force on February 5 of next year, covering 90% of Russia’s existing oil imports. Bulgaria, on the other hand, was exempt from the restrictions until the end of 2024. As a result of the EU’s decision to reduce Russian oil exports, Russia has sought consumers overseas, offering cheaper prices in an effort to sell its petroleum.
India has emerged as a beneficiary of the Kremlin’s low-cost crude. In 2021, India’s oil imports from Russia peaked at 35,000 barrels per day on average.
Despite nearly nil Russian imports in January and February 2022, India’s Russian crude imports averaged 68,000 barrels per day in March 2022. During the conflict, India’s seaborne oil supplies from Russia increased steadily, reaching 959,000 barrels per day by November 2022, a 14-fold increase.
The importance of seaborne crude trading in the Kremlin-Beijing energy relationship has expanded. China’s seaborne crude oil imports from Russia climbed from 670,000 barrels per day in February to around 1.1 million barrels per day in November. During the same time period, Turkey’s oil imports from Russia than quadrupled, from 110,000 barrels per day to 327,000 barrels per day on average.
Cuba, which had very few oil imports from Russia before to the conflict, bought 48,000 and 23,000 barrels per day in October and November, respectively. After nearly two years without any imports, the United Arab Emirates joined the cheap Russian oil buyers’ club in May 2022, purchasing around 35,000 barrels per day.
The country’s seaborne oil imports from Russia were at roughly 28,000 barrels per day in November. Italy raises its Russian crude imports while the Netherlands falls: Even before the EU’s sanctions package went into force last week, a handful of European countries had nearly completely eliminated their Russian crude imports.
Italy was an outlier, increasing its Russian crude oil imports from 163,000 barrels per day in February 2022 to 322,000 barrels per day in November 2022. In June 2022, the maximum level was 443,000 barrels per day. The Russian corporation Lukoil’s ISAB refinery near Syracuse, Italy, drove the surge in imports.
The Netherlands, which was one of the EU’s largest consumers of Russian petroleum before the conflict, likewise departed from its European neighbours by continuing to trade, although in lower volumes. Russian crude exports to the Netherlands dropped to 152,000 barrels per day in November 2022 from their 595,000 barrels per day level in February 2022.
‘About 500,000 barrels of Russian oil are currently exported via the northern leg of the Druzhba pipeline to Germany and Poland. Both countries committed originally to stop these imports together with the seaborne imports, albeit Poland has spread some doubt about this recently.’
‘If these pipeline exports are really stopped, it means Russia would have to export that crude via seaports, adding to their need to find new buyers.
The Druzhba pipeline, also known as the Friendship Pipeline, is the main line carrying oil from eastern European Russia to Ukraine, Belarus, Poland, Hungary, Slovakia, Czechia, Austria and Germany. A total of 2.5 million barrels of crude oil and 700,000 barrels of petroleum products were transported via the pipeline in October for EU countries.
The sanctions will be temporarily on hold for some landlocked countries, including Hungary, Slovakia and Czechia. These countries will be allowed to import Russian crude oil via the Druzhba pipeline, although they will not be able to sell the oil they buy to other member countries or third parties. # Russia’s Oil Exports to India, China Spike
