Posted on 07/26/2022 3:26:51 PM PDT by BeauBo
Asian nations are letting up on discounted Russian oil exports, with Bloomberg data showing a 13% decline over the past four weeks as Chinese and Indian demand ease, chipping away at Russian oil revenues.
China and India account for purchases of 55% of Russia’s seaborne oil exports; however, Chinese demand over the past four weeks has dropped by 52,000 barrels per day, while Indian demand has eased by 18%, according to Bloomberg.
Reuters also reports that Chinese state-run Sinopec–the biggest refiner in Asia–reduced purchases of discounted Russian ESPO crude oil this month after refusing to outbid Indian buyers.
Citing trading sources, Reuters said Sinpoec’s move was purely mathematical and not geopolitical...
Beginning in May, however, China has seen a 14% decline in Russian oil purchases due to renewed COVID-19 lockdowns that hampered Chinese demand.
Last week, Bloomberg reported that Russian crude exports to China and India were down 30% from their peak in April and May, shortly after Russia launched its invasion of Ukraine and sanctions were put into place.
(Excerpt) Read more at oilprice.com ...
Oil prices are down 20% from their recent wartime high. Gas prices are still quite high, but gas export volumes have dropped much more, as compared to oil.
The Nordstream pipeline is now operating at only 20% of capacity.
Russia's export volumes are expected to continue dropping this year due to sanctions. When prices drop (as they inevitably do eventually), Russian revenues are poised to drop off a cliff.
Widespread, or global recession could bring that price drop sooner, rather than later.
Not woth Slow Moe Joe and idiotic Euros stopping drilling... In a perfect world the US would be flooding the markets woth cheap oil right now,specifically targeted for domestic and EU consumption. And we would be pressuring Europe to expand their production.
The world consumes 90 million bbls of oil a day. Any significant decrease in consumption means that the global economy is in a recession or worse. During the Covid-19 lockdowns, the decline in consumption of oil was 13%. Our economy was in the toilet and only government bailouts (Fed printing money) mitigated the impact.
You can take solace that Russia and other major oil exporters will see reduced revenue, but the US economy along with Europe’s will be in tatters. We need high consumption of oil and gas to run our economies. US oil consumption is down about 8% now.
He’s been told he is the savior of the world, sending
everyone over the economic cliff to stop something we
have no control over.
Now they’re going after cattle.
This is how China and Russia killed off about 70 million
of their own people, letting Communists in control of the
food supply.
It’s going to turn grim if we don’t take back the House
and Senate, and take measures we should have under
Trump.
LOL, Russia only exports half the gas it used to export...except it is getting ten times more for it.
That article is from June 14. Now the situation is different because Iraq is offering Crude at the same discounts and so it is safer to increase some purchases from there. The grades are not the same so Russian crude will be purchased as long as they discount heavily.
“LOL, Russia only exports half the gas it used to export...except it is getting ten times more for it.”
The gas being delivered to Europe is under pre-existing contracts, that set the price.
The volume is way down though. Nordstream is only running at 20%. That gas flow is doomed to being replaced by other suppliers, only the schedule might vary.
A tanker full of oil can be sold on the spot market, and Russia can still move those. Although total oil volume is down somewhat, and on a declining trend, price is still strong by historical norms, despite already being down about 20% from the peak of the war price spike.
Even with the additional discounts that Russia must offer on its oil because of the war, and the relatively higher cost to produce that it has, Russia can still make money on oil, at present.
The stories of record Russian revenues are now a bit dated, as prices have already passed peak, and volumes continue to steadily decline. That noose will continue to tighten, inevitably.
When Europe has fully replaced Russian tanker shipments of oil this December, the next phase of strangulation is already well planned.
December 5th is now the target to impose price caps on Russian oil. This is the first phase of imposing secondary sanctions on other countries that would buy Russian oil. It is designed to make Russia absorb the costs of the sanctions.
Other countries would be faced with higher penalties than they would save from the discounted Russian oil prices - unless they stick with the new very low buyers cartel price for Russian oil (in which case, they get even better prices). Its a win for the other customers, only Russia loses.
Russia will be faced with the choice of making very little on its oil, or nothing at all.
If, as seems likely, widespread recession occurs this year or next, lower prices will choke off the profits from any smuggling scheme.
Putin is a master strategist, who controls the whole world, and is ten feet tall.
Get out while you can.
“India, China buying MORE Russian oil”
Would now read “India, China WERE buying MORE Russian oil”
The peak has passed. It may have been fun while it lasted, but it was brief.
That article you posted was from about six weeks ago, and was looking backward. The peak was probably in May.
Prices are down a good 20% from the peak. Russian export volumes are now no longer just declining rapidly to Europe, but now also declining to the great hopes of India and China.
It would take a few years to replace Russia’s oil and gas for the world market, during a period of economic growth. But during a recession, it is much more feasible to make Russia absorb all or most of the reduction in sales.
As recession hits the world, the effects will be concentrated hardest in the Russian oil and gas sectors.
The Russian economy is in for a hard landing.
The war will be over soon—or at least in this phase. In six month we will be buying Russian oil.
“The war will be over soon—or at least in this phase. In six month we will be buying Russian oil.”
I think it very likely that we will be in a new phase at year’s end, but I don’t see how the war will end in the next few months. Neither side has the power to force it, neither seems likely to surrender.
By the end of the year however, both the Ukrainian and Russian economies should be in dire straits. The Ukrainians have the EU and Americans to float their smaller boat. Nobody is likely to be sending huge bailout checks to Russia. Some predatory lending from China (designed to take control of natural resource deposits at pennies on the dollar) is the best they can expect, in foreign aid.
If there is a recession (as seems likely) Russia will remain poised to absorb the bulk of the Global losses in oil and gas sales.
After the war/after the recession, other suppliers (almost all of whom have inherently lower cost to produce) will naturally want to keep the new market share that they gained at Russia’s expense. What customer is going to want the risk of going through this again, with Russia as a supplier?
The longer this goes on, the deeper the hole the Russians will be in. It is already very, very deep.
No, it's increased.
“No, it’s increased.”
Not according to the article above.
Russians have been trying to negotiate better prices, and can’t move as much of their product without the steep discounts (sometimes over $30 per barrel) that made it irresistible for a while.
And that bad PR is going to come to Americans via CNN, MSNBC, ABC, NBC, CBS and a couple of assorted fish wraps? All they do is lie, so who cares?
You are talking like a Roman a year before fall.
My guess is that in months the USD is not going to be what it used to be and a great deal of weapons your government sent to Ukraine is going to return stateside with the cartels and organized crime.
Punishing Russia is not going to be a priority at this point.
Americans are likely to get hunted all around the third world, both military and civilians making the access to raw materials much harder.
Look at the Middle East to start with. Is there anyone pro-American left except Israel? Israel is actually between a rock and a hard place as well.
As for the Russian oil, check out its percentage in the total economy. Russians are going to do just fine exporting 20% of current volume. If you’d hear from their big oil CEOs they advocate cutting exports already. Are you going to do okay with $12-16 gas as a result is another question .
But it won’t. And I don’t believe a word of this article based on what I read today.
David Stockman’s analysis was much better and more true to form than the crap being spread out there:
https://www.lewrockwell.com/2022/07/david-stockman/europes-economic-suicide/
Oil prices may down a little now but could go back up and way more than the high.
“ Russians are going to do just fine exporting 20% of current volume.”
Putin is a master strategist!
Why didn’t anyone think of that approach before? Sure victory!
Actually, that is about as fine as you will be able to do. 20% of the volume, but on lower prices. All While the other sectors of the economy implode.
The hammer is really going to drop when all that former revenue suddenly dries up, and the knives will be out to fight over what is left. Many will have to be cut out, and their anger will demand blood. Even if it is not about anger, they will have to spill blood to get their piece of that much smaller pie.
What a disaster for Russia, being driven over the cliff like this.
P.S. The USA is the world’s largest producer of both oil and natural gas, with proven technological and financial ability to grow production of both at double digit annual growth rates (unlike Russia). We can take care of ourselves, and your former market share as well. Party on Russia’s former pie! Everybody grab a piece! Putin is a master strategist!
“ Oil prices may down a little now but could go back up and way more than the high.”
Oil prices have historically swung widely. Boom and bust is characteristic of the industry.
A big factor is the global economy (demand). When recession hits, total demand can drop 10 or 15% (more than Russia’s total contribution to supply).
It looks like widespread recession is near at hand, with bond yield rates inverted, and Central Banks slamming on the brakes to quell inflation, with interest rate hikes like we haven’t seen in about half a century.
As demand drops, there is going to be overwhelming pressure (and widespread consensus) to stick Russia with all the reductions in market share. They are a pariah State because of their conduct in the Ukraine, which has been nothing short of demonic. Many of the World’s major economies now view it as a critical National Security imperative, to ensure that Russia is excluded from oil and gas markets.
What lower price? They get more than ever, even with a discount factored in. Forget about the oil price cap. Russia is not going to abide it. As a side note, do you know on what budget the USSR caused the US troubles in the 1970s? Russia is more equipped to do so no matter how hard are you trying.
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