With the US reportedly said to vote as soon as Tuesday on a proposal to ditch trade relations with Russia and Belarus, including suspending oil imports despite repeated objections from Germany which has stated that a collapse in supply threatens “social cohesion”, Russian Deputy PM Novak said that a ban on Russian oil would result in catastrophic consequences for global market according to Interfax, warning that Europe is pushing Russia towards an embargo on gas deliveries through Nord Stream 1, which is currently filled to maximum capacity, although Moscow has not taken this decision yet.
Warning that “no one would benefit from an embargo on gas deliveries through Nord Stream 1”, Novak said that replacing Russian oil deliveries to Europe would take longer than a year.
he also warned that a global embargo on Russian oil could push prices over USD 300/bbl, although he said that Russia knows where it would re-direct oil to if Europe and US refuse it.
Addressing a potential ban on Russian oil, Goldman’s commodities team wrote overnight that Europe’s dependence on Russian oil imports, of c. 4.3 mb/d of which 0.8 mb/d comes from pipeline, suggests that such a coordinated response will likely take time, leaving the possibility for only a US ban in short order.
While the headline of potential further US sanctions are likely to support prices, such a move would likely have negligible impacts on global crude and products markets. The US only imports a little over 400 kb/d from Russia at present (Dec-Feb average), already down from a peak of 770 kb/d in May-Jun 2021.
