Russia rushed to load oil onto tankers for sale after US sanctions were eased

Moscow has rushed to load oil onto tankers to take advantage of a sharp price spike caused by Iran's effective closure of the Strait of Hormuz, as well as a US tariff waiver allowing buyers to purchase these volumes without fear of sanctions.

Source: Bloomberg

Details: Russia is benefiting from a dual effect: rising prices for global benchmark crudes, which has also lifted the price of Russian exports, and the extension and expansion of a US tariff waiver that allows all buyers to purchase Russian oil loaded before 12 March.

Further easing of sanctions is also possible if flows of Middle Eastern oil through the Strait of Hormuz are not restored in the near future.

The surge in purchases helped push the price of Russia's key export blend delivered to India to a record level, providing unexpected revenues for the Kremlin's military budget for the war against Ukraine.

The combined increase in prices and volumes resulted in the biggest weekly jump in revenues since Russia's invasion of Ukraine.

Price growth was also reinforced by increased flows last week following the resumption of shipments from the Sheskharis oil terminal in Novorossiysk on the Black Sea after a Ukrainian drone attack on the night of 1-2 March.

According to the latest data, Russia's seaborne exports averaged 3.44 million barrels per day in the four weeks to 15 March, based on vessel-tracking data compiled by Bloomberg.

This is about 90,000 barrels per day more than in the period to 8 March, but still roughly 400,000 barrels per day below the pre-Christmas peak seen before the pandemic.

Background:

• Before the start of the war in the Middle East, Russian oil was trading at its largest discount since 2023 – US$30.62 below Brent, with the price per barrel at US$40-42.
• Earlier, Reuters reported that rising oil prices would not save Russia's budget, which had been based on a price of US$59 per barrel. At the time, the price of Russia's Urals blend rose only to US$46.1 per barrel, as US sanctions remained in force.
• The price of Russian Urals crude on the Indian market has now climbed to US$98.93 per barrel, with its discount to Brent narrowing to just US$4.8 – the lowest level in four months.

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