The protracted conflict in Ukraine and sanctions imposed on Russia left the country with few customers, and the price of Russian Urals crude in January was close to $52 a barrel, close to levels not seen in a year and nearly 35% higher. below the price of international references.
The G7 nations the EU and Australia set a price cap of $60 a barrel on December 5, and Russia’s main oil product is well below that mark.
According to tanker tracking data released by S&P Global Commodities, Russian offshore oil imports to Europe fell 80% in 2022 as European refiners switched to crude grades from Norway, the US, Saudi Arabia, Guyana and Azerbaijan.
While the shipping distance increased freight costs and forced barrel discounts to compete with supplies from the Middle East, China and India remain the two biggest consumers of Russian oil.
Oil price falls on rate hike fears
Tuesday’s slide in WTI crude futures nearing $74 a barrel ended a three-day rally as aggressive comments from US Federal Reserve officials eclipsed expectations of a revival in oil. Chinese demand.
While Federal Reserve Bank of Atlanta President Raphael Bostic commented that policymakers should go above 5% early in the second quarter and keep it there for a long time, Federal Reserve Bank of Atlanta president San Francisco, Mary Daly, said she anticipates the central bank will raise rates to more than 5%. %
Ahead of the Chinese Lunar New Year, investors were also concerned by concerns that an increase in travel could result in a rise in Covid cases in the world’s biggest crude importer.
India needs oil for domestic use and Russian oil is now affordable. In addition, India has the refinery capacity to transform crude oil into goods that the EU is eager to buy, such as diesel fuel. Politics is not a factor; business as usual prevails. The EU is the victim. Oil prices have risen as a result of its unwillingness to buy Russian oil as it is looking for alternative suppliers. There is zero or no alternative.
Saudi Arabia decided to raise the limit on its daily production from 7 million to 13 million barrels. If the Saudis don’t change that, the rise will continue for another five years. The Saudis are also buying Russian oil since it is less expensive than their own oil on the open market. Biden believes he has achieved his goals and obtained more oil for the United States despite having been deceived by Saudi Arabia. It remains to be seen how this will affect world oil prices.
