Russia’s Baltic Sea crude exports could fall further amid new European sanctions and the price cap. Shipments from Baltic Sea ports could see as much as a 20% drop in December, Reuters reported. Traders said Russia has failed to fully redirect flows of its flagship Urals crude from Europe to China and India. Loading Something is loading.
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Since the onset of the European Union’s Russian seaborne crude embargo and accompanying price cap, Russia has been struggling to redirect flows from Europe to buyers in Asia. Exports of its flagship Urals crude coming out of Baltic Sea ports could tumble 20% this month, according to a Reuters report.
Traders told Reuters that Russian sellers have struggled to find an adequate number of vessels to carry oil supplies. They estimate that Urals exports from Baltic Sea ports could drop from 6 million tonnes to about 5 million tonnes in December.
Urals crude exports from the area have been further aggravated this month, per Reuters, thanks to a shortage of non-western tonnage, a faltering export economy, as well as weak demand for the fuel.
The December 5 price cap of $60 a barrel, which was agreed upon by the EU, G7 nations and Australia, is meant to squeeze Russia’s export revenue, while still keeping its oil moving through global markets. It came into effect at the same time as the seaborne crude embargo.
The cap allows countries outside the bloc to import seaborne Russian crude, but for barrels sold at a price above the cap, then it prohibits services and insurance for vessels handling the oil.
Officials in Moscow have said repeatedly that they would not abide by the cap, even if that meant slashing oil production. The dynamic has raised uncertainty in global energy markets, as a possible supply disruption could cause crude prices to swing.
Russia’s deputy prime minister said Friday that it was unacceptable for Russia to be dependent on decisions made by unfriendly nations.
“We are ready to go for a partial reduction in production,” Alexander Novak, Russia’s deputy prime, said in an interview with state-run Rossiya-24 TV channel, per Tass. “I assess the risks, when we are at the beginning of next year, we may have a reduction of somewhere between 500,000 to 700,000 barrels per day. This is about 5-7% for us.”