Posted on 09/23/2022 11:41:47 AM PDT by BeauBo
In September, Indian refiners are not expected to buy any ESPO crude from Russia because of the higher shipping rates. African and Middle East crude becomes more attractive as shipping rates on long voyages have jumped...
However, with a recent surge in freight rates, Russian oil doesn't look so cheap. Moreover, the travel time from Russia's Far East, where the ESPO grade is loading for exports, is a month to India, compared to a week necessary for a Middle Eastern cargo to reach India...
"On net back basis after factoring in the freight, the landed cost of ESPO is turning out to be $5-$7 a barrel costlier in comparison to similar grades from other countries such as UAE's Murban."
(Excerpt) Read more at oilprice.com ...
American oil (WTI) is below $80/barrel, and European (Brent) is around $85. Natural gas prices dropped almost 4% today.
Business is going to be using less energy down the road.
Fewer businesses. Less products. It just doesn’t require
as much energy.
Disrupted markets have a funny way of causing mass
disturbances in the force.
Russia is inherently not competitive on price, due to the nature of their deposits, their harsh climate and the long distances to port. Their breakeven was somewhere in the $50’s per barrel before the war.
Even once it is loaded on ships, Russian oil is mostly much further from major markets (outside of Europe), and now faces significantly higher transaction costs, like insurance, as well as those large transportation costs.
Even if prices stayed far above their Pre-COVID norms (which now does not seem likely), there are not enough tanker ships in existence to take the rest of the oil that Europe imports from Russia, on the longer trips to Asia - especially not enough arctic ice rated tankers.
On December 5th, Europe stops accepting oil tanker loads from Russia, and their export volume is going to take a hard hit, no matter what discounts they could offer. Currently, European buyers are still legally stocking up on Russian oil tanker loads, but that will end precipitously in December.
As prices drop back to their pre-COVID, pre-war norms, Russia’s breakeven price is now even higher than before. Russia is going to have to absorb the bulk, if not all, of the reduction in global demand during this developing recession. As Indian buyers are showing already, we won’t have to wait till December for that.
Russia is screwed.
Excited to learn how Putin is really a genius for the 9000th time (Russia is Venezuela in the arctic).
If the West really wanted to screw Russia it would crack down on oil and LNG tankers owned by western companies carrying Russian product. I’m not sure we need to do that… but Russia and China and the Saudis just don’t own enough ships to remotely make up the difference.
Global recession coming. Oil and nat gas prices going down.
“Global recession coming. Oil and nat gas prices going down.”
Russian imperialists to be hardest hit.
Next week, the new Baltic Pipe to Poland starts flowing 10 bcm of natural gas per year from Norway - completely replacing what they used to buy from Russia.
Putin is a master strategist, and is ten feet tall.
What Modi said to Putin off-mic:
“Need better discount!”
Trying to be objective here — The outlook for gas prices this winter is not so great, however. From the same source:
https://oilprice.com/Energy/Energy-General/A-Natural-Gas-Shortage-Is-Looming-For-The-US.html
This has been in the making ever since Brandon took office. Pubs need to hang Biden and his ilk out to dry on this one.
Do any of our petro business types on FR know why rigs are reduced in the Permian?
https://oilprice.com/Energy/Energy-General/A-Natural-Gas-Shortage-Is-Looming-For-The-US.html
A coal power plant near me just went offline for good recently, too. 3 years ahead of schedule. No reason given.
The Jacki Daily show has a lot of good info on the energy sector influence of woke investment companies like BlackRock
https://podcasts.apple.com/us/podcast/the-jacki-daily-show/id1022438086?i=1000579337521
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.