THE EVOLVING IMPACTS OF RUSSIA’S INVASION OF UKRAINE ON OIL FLOWS

Homayoun Falakshahi, Jane Xie and Matt Smith at Kpler try to make sense of the effects on the oil markets of Russia’s ongoing war on Ukraine Russia’s invasion of Ukraine has shocked the global oil market. After catapulting higher from pre-invasion prices of less than US$100/bbl to as high as US$139/bbl, international Brent crude prices continue to remain elevated. Availability of oil to refiners, particularly those in Europe, has been curtailed. This is, however, not because of any formal sanctions on Russian energy exports, which so far only the US and the UK have subscribed to. This is mainly due to a large extent of ‘self-sanctioning’ by buyers, who have shunned Russian barrels due to increased reputational risks, credit and liquidity challenges amidst the withdrawal of trade financing from banks that fear exposure to existing Russian sanctions. In fact, for most of March 2022, Russian oil loadings have continued apace. Seaborne exports of crude oil from Russia have even increased in March to over 3.3 million bpd when including Russia’s share of CPC volumes, around 10%. However, an increasing number of barrels are not finding homes as quickly as before. This is an...