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US Treasury Says Russian Oil Exemption Will Not Benefit Moscow Financially
Russian Oil: Since the Iran crisis began, the price gap between Russian oil and Brent crude has narrowed significantly. On Tuesday, Russian Urals was trading at $101-102 per barrel, and Brent crude at $110. In February, before the war, Russian Urals was trading at $55 and Brent crude at around $70.
In an attempt to mitigate the effects of high prices of oil globally, the US government has granted permission to purchase Russian oil for another month. According to the US Treasury documents, the extension of the permit allows the purchase of Russian petroleum products that are loaded on vessels. This means that other nations such as India can purchase the Russian oil stranded in the vessels, although they have to pay a higher cost.
According to CBS News, approximately 124 million barrels of Russian oil are stranded in vessels around the globe. Although this quantity of oil will boost supply, it will not have much effect on the prices of oil. Russia has 120 million barrels of oil floating in the oceans, which is equivalent to one day of global oil consumption, amounting to about 104 million barrels daily.
Warren Patterson, head of commodities strategy at Dutch bank ING, said the US move will not fully compensate for the supply disruption. There is only one solution for the oil market: the smooth resumption of supplies from Hormuz. India and other Asian countries are the most likely to purchase this newly available Russian oil.
