The invasion of Ukraine has rapidly made Russia a commercial outcast, resulting in most buyers and shippers avoiding cargoes of its crude, diesel, heavy naphtha and vacuum gasoil. That’s causing abrupt changes in market structures, price dislocations andThe result is a physical market for crude too chaotic even for veteran oil traders who have spent years deftly handling everything from political sanctions to trade wars and attacks on key infrastructure.
“Geopolitics are throttling supply chains and keeping markets on edge,” said John Driscoll, a Singapore-based chief strategist at JTD Energy Services Pte. The wild swings in intraday trading ranges, volatility and backwardation are “scary,” he said. Commodity markets have been in turmoil since the invasion. While sanctions haven’t directly targeted Russian energy exports, trade has seized up amid a reluctance to buy the country’s raw materials.
, international banks and shipowners are pulling investment and financing, making it tough for refiners and traders to secure credit lines and the vessels needed to continue with their usual purchases of oil grades like Urals, ESPO and Sokol.Russia accounted for 12% of the world’s total crude exports in 2020 and almost 10% of oil-product shipments.
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