Crimea crisis hits prices
Crude prices edged lower after briefly hitting their highest levels this year, amid escalating tensions between Ukraine and Russia, Petroleum Argus reported in early March. Atlantic Basin benchmark North Sea Dated rose to $111.40/b on 3 March, before falling back to 108.02/b on 6 March, a decline of 56¢/b from a week earlier. US light sweet benchmark WTI fell by 84¢/b to $101.56/b. Oil prices rose on fears that a conflict between Russia and Ukraine would disrupt more than 1mn b/d of Russian crude supplies along the Druzhba pipeline to Europe, and threaten the transit of natural gas to Europe. However prices weakened as it became clear that shipments were unaffected.
Russian refiners still planned to ship 60,000 b/d of fuel oil and 70,000 b/d of vacuum gasoil through Ukraine in March, reported the market analyst. Russian Urals and Caspian crude exports by Baltic and Black Sea ports do not transit through Ukraine and continued as normal. The Urals discount to North Sea Dated narrowed because of tighter supplies in March. However, demand was slow because of refinery maintenance.
‘Regional sour crude supply looks likely to rise, given export capacity growth in southern Iraq,’ it noted. ‘The new capacity helped lift Iraqi crude exports to a 25-year high of 2.8mn b/d in February. Malaysian and Chinese sellers offered plentiful supplies of April-loading Basrah Light in the Asia-Pacific. Rising exports from Iraq and concerns over a loss of market share may have prompted Saudi Arabia and Abu Dhabi to cut official formula prices.’
‘Refinery turnarounds have undermined crude demand. Concerns over disruption to Russian oil exports have eased. Transshipments of products to Ukrainian ports appear unaffected so far. And Europe’s dependence on Russian oil and gas limits the likelihood of EU members levying sanctions that could affect supplies.’
‘However, the crisis has exposed the oil market’s vulnerability to disruption. Atlantic Basin crude supply is tightening with forthcoming maintenance in the North Sea and persistently low Libyan output. Reduced refinery throughputs and maintenance in Europe are eating into already low product inventories, while cold weather in the US during the turnaround season has led to a stock draw. Prices could rise again should there be any disruption to Russian shipments.’
News Item details
Journal title: Petroleum Review
Countries: Russia - Ukraine - Crimea -
Subjects: Trading, Maintenance, Policy and Governance, Oil and gas
