Russia was shipping more than 3 million barrels per day (bpd) of crude oil to Asia in the week to December 9, the week in which the EU embargo on imports of Russian crude by sea came into force, vessel-tracking data monitored by Bloomberg showed on Monday.
Oil prices rose as much as more than 1% on Monday as a key pipeline supplying the United States remained shut while Russian President Vladimir Putin threatened to cut production in retaliation for a Western price cap on its exports.
RIYADH: Saudi energy minister Prince Abdulaziz bin Salman said on Sunday the impact of European sanctions on Russian crude oil and price cap measures “did not bring clear results yet” and its implementation was still unclear.
The $ 60-per-barrel price cap on Russian crude oil, which came into effect on Monday, looks pretty straightforward. Buyers paying $60 or less per barrel of Russia’s crude will have full access to all EU and G7 insurance and financing services associated with transporting Russian crude to non-EU countries.
The enforcement of the price ceiling for Russian oil transported by sea enacted on December 5 is not a surprise, as this measure was being discussed by the Unites States and its key partners as early as September 2022
Energy is the best performing sector year-to-date. The S&P 500 Energy ETF (XLE) is up 62%, far outperforming any other equity group in 2022.
Oil rebounded on Tuesday after plunging by more than 3% in the previous session, as the implementation of sanctions on Russian seaborne crude oil eased concerns about oversupply while the relaxing of China’s COVID curbs bolstered the demand outlook.
Upstream investment in Russia’s oil and gas sector is set to plunge 30 per cent to $35 billion this year amid sanctions and a mass departure of foreign companies, Rystad Energy said in a report on Thursday.
Upcoming sanctions on Russian oil are set to be “really disruptive” for energy markets if European nations fail to set a cap on prices, analysts warned.
As more shippers and insurers turn away from handling Russian oil after its invasion of Ukraine, the remaining tankers still willing to handle such sensitive deals are able to charge higher prices.