The supply chain in America’s…
Recession fears have been driving…
After facing a huge backlash last week and over the weekend when it snapped up a cargo of Russian crude at a bargain price at a time when many other players had started to curtail their purchases effectively creating an informal "self-sanction" embargo, Shell said on Tuesday it is withdrawing from dealing in Russian oil and natural gas, saying it would immediately halt all spot purchase of crude from the country and will phase out its other trading and business dealings, the WSJ first reported.
Over the weekend, Shell had already apologized for the purchase and said it would commit profits from its Russian oil purchases to humanitarian funds aimed at alleviating the crisis in Ukraine. Shell had previously said it would exit its joint ventures with Russian energy giant Gazprom PJSC.
On Tuesday, Shell also said it would also shut its service stations and aviation fuels and lubricants operations in Russia, and it won’t renew any Russian term contracts. It said it would find alternative supplies of oil as soon as possible, though it cautioned it could take weeks to fully make up the difference, leading to reduced production at some refineries.
While the U.S. and its allies left energy out of an array of economic sanctions imposed on Moscow in response to the invasion (although we now know the US will soon ban Russian oil sanctions) many refiners went further shunning Russian crude. Such self-sanctioning has taken a chunk out of global supplies, pushing prices for international benchmark Brent sharply higher. Traders say it is also causing a backup in Russia’s energy supply chain, prompting refiners to cut back production.
More Top Reads From Oilprice.com:
The leading economics blog online covering financial issues, geopolitics and trading.