EU sanctions on Russian oil could disrupt global supply – analysts – RT Business News
Restrictions could force Moscow to cut crude production, experts quoted by Reuters
The EU ban on imports of Russian petroleum products could disrupt global trade flows after the measure came into effect on February 5, Reuters reported on Thursday, citing analysts.
The bloc’s sanctions targeting refined petroleum products, including diesel and jet fuel, could ultimately impact overall supply due to the risk that the restrictions will force Russia to curb production and refining.
« The barrels will come out and find a market, a logistical challenge but not a supply challenge », Ian Moore, senior research associate at global brokerage firm Bernstein, told the agency.
However, finding alternative buyers for refined products should become a bigger problem for Russia. The country’s discounted crude oil volumes are currently in high demand in India and China, two countries that are major exporters of petroleum products and have vast refining capacities.
“While the ban would leave Russia with more crude to export, there might not be enough destinations to export the surplus to, and so Russia might have to cut production by 5-10%,” Pei Hwa Ho, an energy analyst at DBS Bank, said, quoted by the news agency.
Last month, Russia reportedly increased the supply of diesel to African and Mediterranean ports in a bid to divert supplies. In December, Russian Deputy Prime Minister Aleksandr Novak said supplies would be redirected to Asia, Africa and Latin America, adding that Moscow would rather cut oil production than accept any price cap. .
Brussels has proposed a price cap of $100 a barrel on diesel and a cap of $45 a barrel on discounted products such as fuel oil. The measures, endorsed by the G7, the European Commission and Australia, still need to be backed by all EU member states, although a deal is expected to be reached on Friday.
The cap follows a similar measure that Western countries implemented on December 5, banning the sale, insurance and transport of Russian maritime crude unless purchased below a price cap of 60 $.
For now, shipments of refined products from Russia remain quite abundant in Europe. The continent is heavily dependent on diesel imports from the sanctioned country, with traders trying to stock up ahead of the restrictions.
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