Energy Markets on War Footing
Russia has choked throughput on a Caspian Sea pipeline carrying crude oil from the Tengiz fields in Kazakhstan to Russia’s Black Sea coast. Russian officials say they were forced to throttle throughput in the 1.4M bpd capacity pipeline after a related port was severely damaged due to weather conditions. They also said it could take up to 2 months to repair the damage, seemingly blaming Western sanctions for that in another veiled threat to energy markets. This pipeline pushes over 60% of Kazakhstan’s oil exports, whose target market is partly composed of Western European refiners.
While Russian refiners are said to be cutting back on production, there is no intra-agency consensus on how much Russian oil output could decline. Estimates are vastly different, leaving us none the wiser. Russian oil is still being traded by plenty, though shipping companies are self-sanctioning and making physical trade difficult. India is still scooping up discounted Russian Urals crude. Most likely, private Chinese refiners are, as well, though data is limited.
The Iranian-backed Houthis on Friday morning bombarded Saudi Arabia in a multi-pronged missile attack. One missile reportedly hit a Saudi Aramco storage facility, the North Jeddah Bulk Plant. While official confirmation of the extent of damage caused by the Houthi missile barrage has yet to come, social media sources say this particular facility is used for storage and distribution…