Due to major changes in world trade routes to accommodate more Russian oil going to Asia, the region with the largest crude imports in the world will not be able to accommodate all the oil that Europe avoids.
Changes are already being made to the shopping streets.
Some volumes that were previously intended for the West will be replaced by Asia, but not all, analysts say. This is due to the two-month voyage to Asia (and a four-month return voyage) that will require many non-tankers not readily available in the global tanker market, says Zoltan Pozsar, Global Head of Short-Term Interest Rate Strategy at Credit Suisse.
“If Russia now needs to transport the same amount of oil not to Europe but to China, the first logistical problem it faces is that it cannot load the Urals into VLCC in Primorsk or Ust Luga, because these ports are not deep enough. to bind VLCCs. . “Russia must first sail Aframax ships to a port for the transfer of STS (ship-to-ship crude) crude to VLCC,” Pozsar said.
The STS transfer takes weeks and once the transfer is complete, the VLCC will sail two months east, unload and return to the Baltic, another two months.
“Conservatively, the Russian crude traveled about a week or two before fueling economic activity (the time it took for smaller Aframax aircraft to travel from Primorsk to Hamburg) and now has to travel at least four months before fueling economic activity.” reports Credit Suisse. notes Pozar.
“Worse, not only is it time for the market to deteriorate, but we are also ending up with a shortage of ships and a corresponding increase in fares,” he added.
According to OPEC analysis in its latest Monthly Oil Market Report published this week, “tanker markets are heavily influenced by uncertainties related to the conflict in Eastern Europe, which is expected to affect trade standards.”
“Aframax spot fares in the Mediterranean increased by more than 70% in March from January levels, while Suezmax spot fares in the Atlantic basin are about 50% higher over the same period. “The power was filtered to the VLCC, improving the general climate,” OPEC said.
The redesign of Russian barrels is very attractive to buyers such as China and India due to the heavy discounts in the Urals. However, refineries in China and India are facing challenges in recruiting excess Russian crude in the short term due to contractual obligations with Middle Eastern producers, according to Wood Mackenzie.
In addition, China has not yet shown much appetite for Russian crude due to many factors, WoodMac said. These include expensive shipments of Russian cargo due to sanctions, payment challenges and tanker insurance, the fact that a trip to the Urals takes twice as long as Middle Eastern items going to China and long-term contracts with Chinese refiners. oil exporters from the Middle East.
Russia may still have eager buyers for its oil in developing Asia, and those buyers may not be interested in the ethics of the Russian crude market, but they will certainly care about tanker prices and availability and much longer voyages.
By Tsvetana Paraskova for Oilprice.com
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