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Central Banks Continue To Stock Up On Gold

Central Banks Continue To Stock Up On Gold

Central banks have added another…

Sanctions Or Not, Russian Crude Is Getting Hit

Sanctions on Russian banks and oligarchs have not halted Russian oil exports, with Indian refiners scooping up highly discounted Urals crude at a record pace, but Western buyers are hitting roadblocks with payments, shipping and banking guarantees, even though sanctions aren’t targeting the energy specifically. 

On Thursday, Russian Urals crude was going for $11.60 per barrel below Dated Brent, representing the biggest discount in over a decade, based on Bloomberg data.

Reuters reports that while Russia has maintained its crude oil and refined product exports, sanctions on Russia’s banking industry that will make it nearly impossible for Russian oil companies to process payments have traders running scared because sellers may not be paid.

Additional fears have arisen about how the market will interpret those sanctions.

“Letter of credit is a bank guarantee, but now it’s quite useless as after sanctions, no Western bank wants to guarantee anything for Russian sellers”, Reuters cited a source with a major Russian oil company as saying.

That, in turn, has led the energy industry to behave as if sanctions have targeted the industry itself.

According to the Wall Street Journal, amid this fear, shipping companies are refusing to load Urals crude, while trading houses are running up against hurdles in getting bank funding based on letters of credit. 

Additionally, WSJ said that some refining companies are already rejecting Russian crude oil.

“The key word today is obviously hold off and do not do anything that could backfire in the future,” WSJ cited Hugo De Stoop, chief executive of tanker company Euronav, as saying. “At the moment, we're not touching any cargo that’s linked to Russia.”

At the same time, Indian refiners have scooped up 6 million barrels of discounted Russian Urals crude, traders told Bloomberg

By Julianne Geiger for Oilprice.com

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