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