Posted on 12/07/2022 2:07:44 PM PST by BeauBo
Russian crude-oil exports have taken a serious hit since new sanctions and a price cap came into force earlier in the week, with the Wall Street Journal reporting that figures from two data providers on Russian crude both show a big fall, though their magnitudes differ.
According to one commodity-analytics firm Kpler, Russia’s seaborne exports fell by nearly 500,000 barrels per day on Tuesday, a 16% decline from the November average of 3.08 million bpd.
Meanwhile, TankerTrackers.com, which tracks sea vessels using signals and satellite images, has reported that Russia's crude exports fell by nearly 50%. With shipments from the Black Sea and Baltic ports accounting for most of the fall.
(Excerpt) Read more at oilprice.com ...
The the new price cap for Russian cargoes is $60, but if the market price drops below that, the cap is indexed to stay 5% below market.
Breakeven price for Russian production varies from one project to another, based on several factors (onshore/offshore, Arctic/Caspian, old or new fields, etc.). According to S&P Global, the range is from around $60 for some projects on the high end (which might become unprofitable with the cap), down to about $20 for some on the low end, with the overall average running around $40. It was unclear to me if that was before or after tax, and tax rates on oil production are relatively higher in Russia than most other producers.
Russia's Federal budget for next year is planned on $70 oil, and is already in a deficit at that price, which means they will be drawing down their National Wealth Fund (which pays pensions, like Social Security does in the USA) at a faster rate than budgeted.
Why would exports fall because of a price cap? People can buy a $72 barrel for $60. It should be selling out faster than a Taylor Swift concert.
russia and china just finished a connection...
“Why would exports fall because of a price cap?”
Transportation capacity constraints.
Russian seaborne cargoes last year went overwhelmingly to Northern European ports, requiring only a week round trip to Rotterdam, for example. For China, it is about thirty days one way, and requires ship to ship transfer along the way (not including any additional transfers needed for smuggling cargoes).
Bottom Line: There just aren’t enough tankers out there to keep that much more Russian crude afloat in transit at the same time.
Because Russia isn’t selling it at that price to the West.
From April 2022:
https://oilprice.com/Energy/Crude-Oil/What-Happens-If-The-World-Runs-Out-Of-Oil-Storage.html
Blowing up the pipeline is like shutting off your house from the municipal water supply. All that water you previously got direct to your sink, shower, and toilets now has to be kept in jugs in your basement, garage, and living room.
Cost of transportation mostly and lack of marine insurance - not counting Moscow issued insurance.
russia and china just finished a connection..
———-
Yes, Russia and China just finished a pipeline- and somehow the West knows how much is being piped to China? Not buying into it. Both China and India have been buying record amounts of Russian oil, but Russia ( nor China) will reveal the amounts. National security issue for both countries.
Fact is: Vlad has outsmarted the meaningless Western sanctions. Please do note OPEC stated yesterday they will NOT increase production- the West will starve for oil…I fully expect US gasoline to hit $7 a gal plus into mid 2023 ( as forecasted by noted economists), Vlad checkmates the West, AGAIN.
Careful war cheerleaders, you are going down the road to destruction.
They won’t listen until it is too late
“the West will starve for oil”
Reality check: Ban and price cap in effect. Oil price down.
Bottom Line: This mechanism provides face saving cover to OPEC+ members to allow Russia to absorb the lion’s share of the reductions in global demand during this recession, and for customers like India and China to gouge big discounts out of Russia. Everybody wins, except Russia.
There is plenty of oil to go around. Global demand typically drops something on the order of one to times Russia’s total exports during a recession, but normally Russia has the market and political power to ensure that other producers share proportionally in the reductions. All of that has been squandered by Putin, and Russia will have to pay most of the bill for the Global oil industry this cycle.
Start capping wells, and laying off workers. Send them to quick deaths in the Ukraine instead.
Putin did that.
“Russia isn’t selling it at that price”
“According to Bloomberg’s oil strategist Julian Lee, Russia’s flagship Urals crude oil traded at a massive discount of $33.28, or about 40% to the international Brent crude oil. In contrast, a year ago, Urals traded at a much smaller discount of $2.85 to Brent. Urals is the main blend exported by Russia. The result: Moscow is beginning to feel the heat of its war in Ukraine, and could be losing ~$4 billion a month in energy revenues as per Bloomberg’s calculations.
Washington is, however, not losing sleep over it. “If Russian oil is going to be selling at bargain prices and we’re happy to have India get that bargain or Africa or China. It’s fine,” US Treasury Secretary Janet Yellen previously told Reuters.”
which means they will be drawing down their National Wealth Fund (which pays pensions,Many tens of thousands of Russian Terrorists won't be collecting a pension. Maybe their dependents, if any, will get a few rubles.
I think they get a Lada and a sack of root vegetables.
surely all you Russian shills will want to hear this good news
Russia soon to be a beggar state!
Don’t ping me to threads I’m not participating in.
why don’t you want to participate in this one?
oh right, because it’s bad news for Russia
Meanwhile the Russian Ruble is trading 62 to one USD. And looking looking at the price action, SOME entity or other is buying the Rubble in large amounts. I think the Russians have this. They planned for this and now they will reap the rewards for their foresight.
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