FILE PHOTO: The Druzhba oil pipeline between Hungary and Russia is pictured at the Hungarian MOL Group's Danube Refinery in Szazhalombatta, Hungary, May 18, 2022. REUTERS/Bernadett Szabo//File Photo
NEW YORK: Sweeping US sanctions on Russia’s oil industry are unlikely to result in a “large hit” to production, as higher freight rates and the nation’s cheap crude support the trade, according to Goldman Sachs Group Inc.
Rising fees have encouraged non-sanctioned ships to move Russian crude, filling the gap left by blacklisted tankers, analysts including Callum Bruce wrote in a note.
The deepening discount of East Siberia-Pacific Ocean oil also creates strong incentives for price-sensitive traders and refiners to keep buying.
Russia’s oil revenues have edged up modestly since the Biden administration implemented the sanctions earlier this month, and Western policymakers are expected to prioritise maximising discounts rather than reducing volumes, according to Goldman. Total exports remain “fairly stable”.
Still, uncertainty around the impact of the sanctions is “high, especially because certain wind-down transactions are authorised through March 12”, the analysts wrote in the note. — Bloomberg
