Posted on 06/07/2022 7:56:40 PM PDT by BeauBo
The biggest reshuffle of oil trade flows since the Arab oil embargo of the 1970s is underway—and things may never return to normal. The Russian invasion of Ukraine and the sanctions on Russian oil exports are changing global oil trade routes. Over the past nearly five decades, oil flowed more or less freely from any supplier to any customer in the world, except for sanctions on Iran and Venezuela in recent years.
This free energy trade is now over, after the Russian aggression and the Western sanctions that followed, plus Europe’s irreversible decision to cut off its dependence on Russian energy at any cost...
Fitch Ratings said last week:
“This (EU) ban will have a significant impact on global oil trade flows, with about 30% of EU’s imports needing replacement from other regions, including the Middle East (Saudi Arabia and the UAE have sustained production spare capacity of about 2MMbpd and 1MMbpd, respectively), Africa and the US.”
“However, we believe that redirecting of all Russian oil and products volumes may not be possible due to infrastructural limitations, buyers’ self-restrictions and logistical complications, such as potential restrictions on providing insurance for cargos carrying Russian oil. As a result, we estimate that about 2MMbpd-3MMbpd of Russia’s oil exports, or about a quarter of the country’s oil production, may disappear from the global market by end-2022”
(Excerpt) Read more at oilprice.com ...
Russian oil ping.
“a quarter of the Country’s total oil production (about half of its exports), are expected to no longer make it to market (anywhere), by the end of this year.”
Do you have numbers on that...specifically what is happening to the major Russian companies, or is it just a ‘feeling’?
Please include India’s June purchases in your calculations.
I will wait and see what happens before I believe this report. Right now Europe is still shipping Russian oil. We will see how much pain the EU can take before they start buying from Russia again.
I bet that really puts the screws to ‘em!
(the rise in prices means they will sell less oil for even more money)
So, when are we going to demand a stop to this national self-destruction?
I see it now in the article, more like Fitch’s ‘feeling’ about what will happen. We shall see.
In any case, the part about now providing ‘insurance’ to the tankers is a joke, which makes the article look more like a hit piece against Russia than any real effort to predict what will actually happen. Are they thinking that the US Coast Guard is going to pull them over in the middle of the Pacific and demand to see proof of insurance or something, say for a ship traveling from Russia to India with both countries agreeing on need for insurance?
Russian oil is tied to the Brent Crude index which is up $30 a barrel since March. Even if there is a 25% reduction in exports it will be a wash for Russia.
Oil is a commodity that is fungible. Even Iranian oil was being sold to Europe, no matter what the US may have said.
Russian oil will just route its way to India and China, among other countries.
“a quarter of the Country’s total oil production (about half of its exports), are expected to no longer make it to market (anywhere), by the end of this year.”
“Do you have numbers on that...specifically what is happening to the major Russian companies, or is it just a ‘feeling’?”
It is a re-statement of the quote provided above, in the excerpt of the article. It is the published assessment of Fitch Ratings (one of the big three credit rating agencies).
“ Oil is a commodity that is fungible. Even Iranian oil was being sold”
Some, but nowhere near as much as before sanctions.
Bottom line: Sanctions took a big hit out of Iranian and Venezuelan oil exports, even after smuggling. Russia is in for it too.
Oil is a commodity that is fungible. Other producers can replace Russia.
“It is the published assessment of Fitch Ratings (one of the big three credit rating agencies).”
Sorry, I saw that afterwards. By the way, does Fitch still rate all Mortgage Backed Securities (including sub-prime) as AAA, as they did until a week or so before the Housing Crash in 2008?
Europe will just purchase rebranded Russian oil “from India” [wink wink] with a markup.
“ In any case, the part about now providing ‘insurance’ to the tankers is a joke”
No, it is a very real expense, and a requirement for an overwhelming number of players in the oil market. Some professionals in the industry consider the prohibition against providing insurance for oil shipments from Russia to be among the strongest deterrents for other potential customers. Most Banks won’t issue lines of credit to clear cargoes, unless they are insured. Few people will keep their job, if the company loses $100 or $200 million, on a single shipment going bad.
Naa, believe it or not, there are insurance companies and banks IN RUSSIA, and there is the Russian Government, who, thanks to the Neocons and their self-inflicted sanctions, are collecting well about $200 Million per day in ADDED oil revenue - so they can back up whatever is needed. Bottom line is that the world doesn’t revolve around London anymore - just as the world will no longer revolve around the dollar, as we just killed that off too.
“Europe will just purchase rebranded Russian oil “from India”“
Europe is signing contracts with other suppliers, who are increasing their production to meet it.
Smuggling will only make up a fraction of Russia’s lost business. No smuggling on that scale could be hidden.
“Europe is signing contracts with other suppliers, who are increasing their production to meet it.”
LOL, you funny. Stop smoking the Unicorn Hopium.
Not to mention it stays below freezing in a lot of Europe for weeks at a time, and they depend on Russian gas for heat (or lack of).
Now tell me about all the new LNG ships and terminals you are going to invent in your mind that will optimistically come on line maybe in a few years.
#14: you are living in a fantasy bubble of the way the world was a generation ago.
That ship has sailed, so to speak.
“the world will no longer revolve around the dollar”
Where are your detailed numbers to prove that, or is it just your “feeling”.
“we estimate that about 2MMbpd-3MMbpd of Russia’s oil exports, or about a quarter of the country’s oil production, may disappear from the global market by end-2022,”
I don’t think so!
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