The anticipated shift of Russian crude oil flows, skewing toward Asia, is well underway ahead of the December 5 oil embargo, according to Bloomberg.
Before Russia’s invasion of Ukraine, less than 40% of Russia’s crude oil made its way toward the prized Asian market. But today, nearly 70% of Russia’s oil is destined for Asia—with China and India making the top buyers list.
Total crude oil from Russia fell to a three-week low of 2.9 million bpd for the week ending November 11. But Russian crude oil headed to China, India, and Turkey—along with Russian crude cargo that haven’t yet announced a destination—have increased to a new record of 2.39 million bpd during that week.
But Chinese refiners, according to Reuters, appear to be slowing their Russian crude oil purchases for December loadings, and China is paying lower premiums as the EU sanctions that go into effect on December 5 approachings, along with the specter of the G7 price cap that is also supposed to go into effect on that date.
According to Reuters, this slowdown in Russian crude oil flows is causing crude to build on, pressuring crude prices, since China and India have become such a large part of Russia’s exports since the invasion.
In fact, traders told Reuters that only about five to seven December loading EPSO Blend cargoes have been sold to Chinese users—in stark contrast to the usual 30 per month.
China’s refiners were paying about $1.70-$1.90 per barrel above ICE Brent on DES basis—down from $2.70 two weeks ago, although traders told Reuters that “everything is under the radar now,” making it difficult to get the details of these deals.
By Julianne Geiger for Oilprice.com