Page 5 - FSUOGM Week 46 2022

FSUOGM COMMENTARY FSUOGM

Setting price caps
would have cut the
Kremlin's revenue by
23% in July-October.

to shift exports between the two markets. For have increased substantially from Nemrut on
coal, limited capacity exists and exports have the Aegean Sea, supported by climbing exports
been picking up accordingly.” from Korfez, south of the Bosporus Strait. These
Imports from Russia also dropped partly increases have significantly outweighed falling
because of weaker economic activity in Europe. EU- and US-bound exports from Marmara Ere-
Expectations that China would loosen its glisi, CREA said.
COVID-19 controls have also not been real- Europe continues to debate whether to
ised, downgrading expectations for that coun- impose price caps on Russian fossil fuel
try’s demand. The International Energy Agency imports, but progress is slow, amid strong dis-
(IEA) cut its forecast for oil demand growth in agreement between EU member states about
2023 by 10% in its October market report, citing whether such measures would be effective,
deteriorating economic conditions. and what form they should take. CREA esti-
Russian oil is increasingly arriving in the mated that setting price caps on Russian sup-
EU through Turkey, CREA said, noting that an plies imported into the EU or carried abroad
increasing amount of Russian crude was being European-owned or insured ships would have
refined in the country. Turkey is in turn sending cut the country’s export income by 23%, or
more refined oil products to EU and US markets. €20bn, in July-October.
The EU ban on such imports does not become Turkish deliveries of Russian oil and oil prod-
effective until February 5. ucts have been largely enabled by EU, US, UK
“Turkish refiners are therefore providing an and Norwegian shipping infrastructure, CREA
outlet for Russia’s oil exports, by refining prod- said.
ucts for markets that are either not willing to “At least 50% of the volumes exported to EU
import Russian crude oil directly or don’t have and US ports in the July-October period were
the refining capacity to process it,” CREA said. carried onboard vessels owned by EU countries,
“As the EU bans crude oil imports from Russia and at least 90% of the volumes were exported
on December 5, this loophole could become on ships insured in the UK, Norway and the US,”
important.” CREA said. “The ownership structure changes
CREA advocated for EU countries and the when looking only at September and October,
US to ensure “that effective enforcement is with the EU share falling to a minimum of 33%.
in place to prevent imports of refined oil that Greek-owned ships carried the largest quantity
includes Russian feedstocks, and take further of Turkish oil products to EU and US ports both
steps to prevent imports from refineries that take in the July-October (38% of the total) and Sep-
Russian crude oil, regardless of whether the oil tember-October period (27%).”
molecules from Russia end up in the products In spite of the decline, the centre noted that
they import.” the EU remained the largest importer of Russian
Exports of Turkish oil products arriving in oil, pipeline gas and LNG, ahead of China, stress-
EU and US ports climbed 85% in September-Oc- ing the impact that the loss of this market would
tober, versus July-August, CREA said. Volumes have on Russian finances. ™

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