Page 6 - FSUOGM Week 43 2022
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FSUOGM                                        COMMENTARY                                            FSUOGM



                         crisis is unlikely to go away.       crude and products from Europe to the Pacific
                                                              Region, many of the recently purchased vessels
                         New front in economic war will open soon  will be required to join the “102 Aframaxes, 58
                         The gas price cap, together with a mooted oil  Suezmaxes and 80 very-large crude carriers” that
                         price cap scheme that is due to go into effect in  have been transporting Venezuelan and Iranian
                         December, could both well bring fresh supply  crude in the recent past.”
                         and price shocks, say analysts. For its part, the   BCS GM speculates that part of the Russian
                         Kremlin has said it will simply cut off supplies  plan is to make substantial at-sea ship-to-ship
                         to anyone that attempts to cap prices. The  transfers to disguise the origin of the oil and gas,
                         assumption in the West is the Kremlin won’t  as bne IntelliNews reported was likely to happen
                         be able to forego the revenues, which make up  in an article on oil and gas leakage to the sanc-
                         the largest part of the government’s income.  tions regime.
                         However, the latest Central Bank of Russia   “Reporting in recent months has indicated
                         (CBR) macroeconomic survey found that  this practice has already become commonplace,
                         the Russian economy is in surprisingly good  with smaller ships often travelling to interna-
                         health and Putin seems confident that he can  tional waters in the Atlantic Ocean to transfer
                         sell enough hydrocarbons to his friends in  Russian crude to larger, more efficient ships to
                         India and China to cover the costs of running  onward shipments to Asia,” BCS GM reports.
                         the country.                           Analysts remain very sceptical that either the
                           In preparation for the coming clash, ship-  oil or gas price caps can be made to work thanks
                         brokers report seeing large numbers of tank-  to the already existent leakages in the sanctions
                         ers being booked by undisclosed customers in  regime.
                         the last six months, leading to speculation that   “We think both policies – blocking insurance
                         a large fleet is being amassed, ready to reroute  and the price cap – are very unlikely to succeed.
                         Russian crude and products from Europe to Asia  The first can be gotten around by determined
                         once the European oil embargo goes into effect  buyers, and the current c$20 per barrel Urals
                         on December 5.                       discount provides a significant $80mn per day
                           “There’s been a sharp rise in the tanker  of such incentive,” says BCS GM.
                         trading” since the start of the Ukraine crisis   Analysts also speculate that any attempt to
                         and ahead of the start of the European crude  impose the price caps will lead to a retaliation
                         embargo on December 5, with many or most  by the Kremlin, which would make good on its
                         purchases being conducted by undisclosed enti-  threat to simply cut buyers off from supplies and
                         ties “based in countries such as Dubai, Hong  that will lead to both a supply and price shock.
                         Kong, Singapore and Cyprus”, according to   “The second will simply not be adhered to
                         Anoop Singh, head of tanker research at shipbro-  by Russia and attempts to enforce price caps
                         ker Braemar, as cited by BCS GM. “Will there be  will see Russian exports drop and, most likely,
                         enough ships? Perhaps... Braemar estimates that,  international oil prices rise materially,” BCS GM
                         to reroute c4mn barrels per day (bpd) of Russian  added. ™









































       P6                                       www. NEWSBASE .com                        Week 43   28•October•2022
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