Saturday, September 30, 2023

As European Union Sanctions are Set in, Russia Sends 89% of its Oil to Asia

  • Bloomberg reports that Russia sent 89% crude oil to Asia in the week prior to December 9th. 
  • The sanctions imposed by Europe have stopped almost all crude imports from Russia. Most of it is headed to China and India. 
  • Moscow has threatened to retaliate against the new sanctions and price caps imposed by the bloc.

The new embargo has resulted in a dramatic drop in the imports of Russian oil by European countries, while Asia is receiving the largest share of the diverted crude. 

The Russian crude supplies were almost half taken in by European nations before the war in Ukraine. But that has all but stopped, with the exception a few imports to Bulgaria. Russia is diverting most of that crude to Asia, with 89% of all Russian shipments — about 3 million barrels a day — heading there in the week ending December 9, according to Bloomberg

More than half the crude oil loaded from Russian ports is heading to the Suez Canal on ships without a final destination. It’s not clear if this oil has been sold or if tankers are being sent out in the hope of finding a buyer. 

China, India and Turkey have seen a significant increase in Russian crude imports this past year and have emerged the biggest buyers of Russian oil despite EU sanctions. In the four weeks leading to December 9, the average daily oil consumption by these three countries grew to 2.73 million barrels. Bloomberg reports that this is more than four times the amount of oil sent to those three nations compared to the four weeks prior to the war in Ukraine.

The December 5 European Union embargo on seaborne Russian oil has had a rapid impact on the flow of Russian crude oil. It effectively removed one of Moscow’s largest and most dependent energy customers. It is being implemented along with a $60/barrel price limit on Russian crude, which Moscow warned would be retaliated against. 

For his part President Vladimir Putin called the price cap “stupid,”He said that Russia was considering cutting its oil production to respond. He also stated that Moscow won’t be affected by the price cap. 

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