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Fate of Global Crude Oil Hangs in Balance as Russia Escalates Ukraine War
Fate of Global Crude Oil Hangs in Balance as Russia Escalates Ukraine War

Fate of Global Crude Oil Hangs in Balance as Russia Escalates Ukraine War

  • 23-Feb-2023 12:47 PM
  • Journalist: Gabreilla Figueroa

London (United Kingdom): Russian forces have taken another strong front as the winds of winter wane; among several other commodities, the most identifiable risk can be seen in the Crude Oil prices. Similar to last year, the Russian forces put on the aggressive in late February, and the impact of the aggression on the global commodities market would be inevitable. Analysts expect volatility in WTI, Brent, OPEC basket, and others, while Russian Crude Oil will be sold at discounted rates globally.

EU has announced an embargo on Russian Crude Oil, which has impacted the Russian producer margins and overall output rates. However, the increased interest of the East in Russian Crude Oil has eased the blow. Both India and China have increased their appetite for Russian Crude Oil, where Ural Crude Oil amounts to 25-30% of total Crude Oil imports in India, while China has witnessed a growth of more than 10% in Russian oil imports on a year-on-year basis.

The increasing affinity of the East towards Russian Crude Oil has boded well to keep the Russian economy afloat; however, it has played a huge spoilsport for the Arab world and other oil exporters. The oil intake from Saudi Arabia has been at a decade low in India, while the oil export numbers have sharply plummeted for the African and Latin American nations alike.

Meanwhile, the Ural discount to forward-dated Brent has again started to widen after some recovery in Q3 and Q4 last year. However, Russian officials expect another recovery as the market acclimatizes to the new oil landscape.

Furthermore, there is a new growing contention in the oil market regarding Russian Crude Oil prices. The Urals have been priced at USD 52/barrel since the imposition of the embargo and oil cap, as per several estimates; however, the Pacific Ocean oil exports are taking place at as high as USD 82/barrel.

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