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Russian crude moves east!

12/08/2022 | 11:24am EST

Relations between the West and Russia are at their lowest. Last Monday, the members of the European Union and the G7 decided on a new sanction against the Kremlin: no more ships carrying Russian crude oil will be allowed to unload their cargo on the old continent. No problem for the Kremlin, its allies are ready to increase their imports.

More than nine months after the "special military operation" launched by the President of Russia on Ukraine, Western countries continue their efforts to curb the Russian war effort. To force Russia to sell its crude oil at a discount and to bring down its budgetary revenues, the EU has implemented an embargo on Russian oil as well as capping the price of a barrel at 60 dollars. This ceiling price is mainly to ensure a certain stability to the market and not to destabilize world production.

In response, China, India and even Turkey started to gobble up all this crude oil that was not sold to Europeans, benefiting from a rebate. Chinese imports of Russian oil rose by 28% in May and are likely to continue to grow. Similarly, India has purchased 60 million barrels from Russia in 2022, up from 12 million in 2021, and Russian oil now accounts for 22% of the country's oil imports. Shadow tankers" are reportedly used by the Russians to circumvent Western rules and deliver to China and India without passing through the ports or territorial waters of European countries.

While waiting for other sanctions to arrive in February 2023 on refined products, the Kremlin is still finding alternative solutions. If these measures do not destabilize anyone in the end, they do benefit some. It is with an ogre's appetite that China and India accept Russian oil at lower cost.

Drawing by Amandine Victor for MarketScreener

 


ę MarketScreener.com 2022
Stocks mentioned in the article
ChangeLast1st jan.
BRENT OIL 0.11% 87.48 Delayed Quote.0.61%
S&P GSCI CRUDE OIL INDEX 0.10% 445.6318 Real-time Quote.-0.21%
S&P GSCI PETROLEUM INDEX 0.31% 318.3307 Real-time Quote.1.43%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) -0.21% 69.23 Delayed Quote.-3.88%
US DOLLAR / TURKISH LIRA (USD/TRY) 0.17% 18.8063 Delayed Quote.0.55%
WTI 0.23% 81.235 Delayed Quote.-0.46%
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