As the Russian invasion of Ukraine rages, and with the global sanction on the Kremlin’s crude oil, the price of the Brent crude hss hit an all-time high of $112 per barrel, just as the WTI hit $110.67 per barrel.
Despite that the sanctions against Russia carved out energy and energy payments out of the SWIFT restrictions and bans, Russian producers can’t sell their cargoes in tenders because no one is bidding, while many refiners-especially in Europe-are shunning Russian crude and scrambling for alternatives.
“Because of the banking sanctions we’ve estimated about 70 per cent of Russian crude oil exports can’t be touched. That’s about 3.8 million bpd,” Amrita Sen, Director of Research at Energy Aspects, said.
“Most European majors are not touching Russian oil, and only a few European refiners and trading firms are still in the market, but spiking freight rates and war insurance premiums are significantly complicating transactions,” Energy Aspects stated.
After the Russian invasion of Ukraine, Russian cargoes have become toxic for most traders, insurers, and tanker owners, although the sanctions do not target energy exports. Some refiners and traders are uncertain how the bank credits would work; others are staying away to avoid reputational damage.
The global oil market is starting to see disruption in Russian supply, which could send oil prices as high as $150 per barrel, according to Energy Aspects’ Sen.
While many major companies and traders are steering clear of Russian cargoes, Shell is reportedly going forward with buying Russian oil and gas, a source told Bloomberg yesterday, adding that Shell would comply with any changes in regulations.