China does not currently have the infrastructure to import more oil from Russia. Therefore, when the storage capacity is exhausted, Russia is likely to have to stop producing oil.
Russian oil could not save its economy from collapsing under the weight of international sanctions.
That’s because the US and UK have banned Russian oil imports; The European Union is considering a ban of its own while China may not have the infrastructure capacity to take in more oil from Russia.
Russia’s military incursion into Ukraine last month prompted widespread sanctions from the West. It caused the value of the Russian ruble to fall, putting the country at risk of default. Russia’s hope is in oil, but that hope is waning.
Since the Russia-Ukraine conflict escalated, about 3 million barrels of oil per day, or 3% of global production, have been removed from the world oil market. The biggest supply shock in decades has pushed oil prices to surpass $100 a barrel. Some experts predict oil prices will rise even higher.
In the context of Russian crude oil being boycotted by the market, many eyes are on China as an ideal destination because it is believed that China will not ignore the highly discounted oil instead of importing it. imported from other places at expensive prices. However, that idea “is unlikely to happen anytime soon,” according to Fed Dalass.
“There is very little spare capacity in the oil pipelines linking China to Russia, and it is not clear where and at what cost China will buy the tankers needed to transport more oil to China.” , wrote the Dallas Fed.
For its part, the European Union is considering whether to join the United States and Britain in sanctioning Russia’s energy exports this week, although leaders remain divided.
Last week, prominent French commodity trader Piere Andreand told Bloomberg News that many countries are avoiding Russian oil even without government sanctions. He said banks – including Chinese banks – do not want to finance Russian oil purchases. In the near future, Russia is likely to have to stop production when it runs out of storage capacity. He thinks that Russian oil will probably “disappear” until the world has confidence in Russia again.
“We’re going to have to adapt to high oil prices to bring demand down,” he told Bloomberg.
Reference: Business Insider
T&G International Joint Stock Company
Address: 352 Hue Street, Le Dai Hanh Ward, Hai Ba Trung District, Hanoi
Hotline: 0345786803
Email: hrm@tginterjsc.com
Website: http://tginternationaljsc.com
