Counting barrels - what is the real impact of self-sanctioning on oil markets?

Mar. 17, 2022 10:34 AM ETTTE, SHEL, EQNRBy: SA News Team32 Comments

Economy sanctions. Inscription sanctions on Russia flag.

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  • As war broke out in Ukraine, Western energy companies refused to purchase Russian oil cargoes; Energy Intelligence estimated the total impact of self-sanctioning at ~2.5mb/d of oil and oil product.
  • The group later revised its self sanctioning estimate upwards, to 3.0mb/d.
  • The IEA Wednesday said that Russian self-sanctioning has yet to hit physical markets, as cargoes purchased before the invasion continued to sail; the Agency said that from April onward, self-sanctioning would restrict Russian supply by ~3mb/d.
  • Morgan Stanley on Thursday adjusted the bank's supply forecast, reducing Russian volumes by 1mb/d from April onwards.
  • However, Energy Intelligence has now flipped its position, the group now says Russian exports are running at close to normal levels.
  • Energy Intelligence notes that trades have increasingly "gone dark" -- trades posted by Platts have slowed, while ship tracking data points to continued exports.
  • Trading houses like Trafigura, Gunvor and Vitol have picked up what the majors like Total (TTE), Shell (SHEL) and Equinor (EQNR) left behind, according to Energy Intelligence.
  • Given the time lag between purchase and loading (~one month) and time lag between loading and visibility in on-shore storage tanks (~one month), there's little concrete data to observe the actual impact of self-sanctioning; however, the market is sure to remain focused on the dynamic, with summer driving season approaching and inventories at multi-year low levels.

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