By Noah Browning and Kavya Guduru
LONDON – New G7 and European Union sanctions on Russian oil exports will have limited impact on global flows and prices according to analysts polled by Reuters, as Russia should largely succeed in redirecting its trade eastward .
The market is expected to be deprived of a maximum of 2 million barrels per day (bpd) of Russian oil in the short term once the measures take effect on December 5, and possibly not at all – a range that does not not raise the prices much. .
The survey of 42 economists and analysts provides one of the most comprehensive insights yet into how the industry views the ambitious plan to starve Moscow of revenue, revealing uncertainty about its impact but little deep concern.
“Russian exports will find other buyers in Asia in the long term. But in the short term, the sanctions could lead to the withdrawal of around 1.5 to 2 million bpd from the market,” said Frank Schallenberger, head of commodities research at the German bank. LBBW.
Commodities trading giant Vitol sees Russian flows shrink to 1m bpd this winter despite building up its own maritime fleet, CEO Russell Hardy told the Financial Times.
Analysts at the Bank of Nova Scotia, however, found that oil export and production levels remained relatively stable despite the sanctions.
Up to 80-90% of Russian oil could still sink if Moscow seeks to flout the G7 price cap, a US Treasury official told Reuters last month, leaving 1-2 million bpd closed.
The International Energy Agency’s group of consumer countries judged this to be an “encouraging level” to meet demand.
Concerns about declining Chinese demand due to strict covid-19 policies and signs of an impending economic recession countered pessimism about Russian supply losses, analysts said.
“The implementation of Russian sanctions… will remove 1.5 million bpd of supply from the market. Russian exports remain resilient, but the fact that there are now few buyers or tankers willing to re-ship more than 3 million bpd is expected to take its toll soon,” said Societe Generale analyst Florent Pelé.
“While we think (the price cap) would be very difficult to implement, it would directionally increase the likelihood of more Russian oil remaining in the market at any price.”