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January 18 (United Press International) — Russia appears to be ditching its crude oil export route to Europe to focus more on consumers on its west coast, although Norwegian consultancy Rystad Energy found deliveries were generally on the rise.
Western economies spent most of last year looking for substitute Take Russia’s natural resources as an example. Before the outbreak of the Ukraine war, these resources accounted for the bulk of European supplies.
A ban on water-based crude and a $60-a-barrel price ceiling for Russian crude have limited the Kremlin’s options in the west, even as energy-hungry countries such as China and India continue to use cheap Russian oil.
Urals, one of the benchmarks for Russian crude, trades between $40 and $45 a barrel, according to Rystad Energy. That compares with $87 a barrel for global benchmark Brent crude.
In a report emailed to UPI, Rystad said its analysts believed Russia was refocusing on the Asian economy, diverting attention away from the loss of oil shipments. Druzhba oil pipeline Europe is one of the largest countries in the world, although “it may be too early to draw any firm conclusions”.
On waterborne crude, Rystad said oil shipments from western Russian ports recently hit a 10-week high of 2.3 million barrels per day. Much of that appears to be heading to India, where Rystad’s imports rose to 1.2 million bpd last month from 950,000 bpd in November.
Despite Western sanctions, Russia has not faltered as many analysts expected last year. Millions of barrels per day are expected to be lost, though not that badly yet.
“The main conclusion that can already be drawn after 1.5 months from the EU (embargo on Russian crude and G7 price cap) is that the impact of sanctions on Russian crude export volumes is not as disruptive as some in the industry had predicted,” Ray said STA analysts found.
Economists at the Organization of the Petroleum Exporting Countries said in a monthly market report in January that Russia’s economy likely contracted by 5% last year, though it is expected to grow a modest 0.2% in 2023 as it adjusts to sanctions.
OPEC, however, hedged its bet by saying public spending continued to prop up the economy, although the future was uncertain given mounting sanctions pressure. European economies will no longer import refined petroleum products from Russia next month, intensifying action on crude in 2022.
Assuming geopolitical tensions caused by the war in Ukraine remain unchanged, OPEC sees a strong domestic market and continued export earnings supporting the Russian economy into 2023.
“However, the contraction that started in the second quarter of 2022 is likely to extend at a slower pace into the third quarter, and with the EU ban on seaborne imports of Russian crude oil in place, the fourth quarter may will deepen again.”
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