Russian oil exports have declined, due to Western sanctions imposed on it as a result of the war on Ukraine, while some parties have found an opportunity to purchase this oil following the reluctance of original customers who have become more cautious, according to a report by the Economist magazine.
Amer Al-Shobaki, a researcher specializing in energy affairs, told Al-Hurra website that Moscow is facing a shortfall in selling its oil by regarding one million barrels.
It is expected that following the contracts expire in April, Russia will face major problems related to production, refining and distribution to the world, with increasing concerns regarding dealing with its oil.
The data company, “Kepler”, said that the volume of Russian seaborne oil exports amounted to 2.3 million barrels per day on March 24, regarding two million barrels less than the level of March 1.
The data company “Kairos” indicated that the volume of Russian oil currently floating, that is, looking for new destinations following the reluctance of the original buyers, rose by 13 percent in the two weeks following the invasion.
Although Western sanctions do not target the oil sector directly, many countries are now unwilling to risk defying these sanctions and deal with new logistical obstacles.
But at the same time, Russian oil seemed like a “deal” for some countries, following Russia offered it for sale at reduced prices.
The magazine notes that Russia does not need to follow the example of Iran, which has circumvented Western sanctions by smuggling oil in roundregarding ways.
With Western companies reluctant, Russian Urals crude is trading at a discount of regarding $30 a barrel, and one trader expects the reduction to reach $40 within a week.
There are two large countries that did not participate in the sanctions that feel the necessity of concluding a deal of this kind, namely, India and China, and the first sees this as an “opportunity” and is expected to import regarding 230,000 barrels per day of it this month, following this percentage was “zero” in the past three months. .
Al-Shobaki explains that India bought, last month, regarding half of the volume of its purchases of Russian oil during the entire past year.
India is seeking even bigger discounts, although the discounts include additional insurance costs, according to Al-Shobaki.
But at the same time, India does not need a lot of Russian oil, at least in the short term, as nearly half of its imports come from the Middle East, according to the magazine.
Although some Gulf oil can be exchanged for Russian, shipping from the Gulf is much cheaper, so India needs a further reduction in the price of Russian oil in order for it to have an economic benefit.
Given that she cannot settle the payments in dollars, she will have to find a mechanism for payment in rubles.
As for “only” China, it is capable of saving Russia, according to the “Economist” report.
Beijing imports in total regarding 10.5 million barrels of oil per day (11 percent of daily global production).
Adi Emserovic, the former head of oil trading at Gazprom and now at the Oxford Institute for Energy Studies, believes that China can opportunistically increase its purchases to 12 million barrels per day. This may allow it to buy 60 million from Russia in a relatively short time.
But China has not yet done so, because transporting oil from Russia is more difficult, while shipping from Russia to Europe usually takes three or four days, transporting to Asia takes 40 days, and oil must be loaded on much larger tankers, the matter Which takes additional time and additional cost.
Also, Chinese banks are afraid to lend, and have to make deals in yuan.
But the most important reason not to act in this way is that Chinese traders may be waiting for a further drop in the price of Russian oil.
With the weakening of Russia’s commercial position, the value of the discount on Urals crude will rise, and with it China’s purchases.
Also, most refineries deal with certain types of ore, which means that switching from ore to ore can take time and money.
Analyst Amer Al-Shobaki did not rule out Russia’s attempt to export its oil to other countries if Europe’s need for Russian oil decreased. He says that it produces 7.2 million barrels of oil and its derivatives, and this amount goes to Europe, and if the continent dispenses with it, there will be regarding 2-3 million barrels “out of service.” This is an amount that India or China does not need.
