NEW DELHI: As the United States permitted other countries to purchase crude from Russia, oil prices in the international market came down marginally, falling below $100 a barrel. Brent crude, which had crossed $100 on two previous occasions, was trading at $98.04 per barrel.
Crude prices fell following the announcement waiving restrictions on Russian-origin crude oil and petroleum products loaded on vessels—including sanctioned vessels—on or before 12:01 am Eastern Daylight Time on March 12. The US announced the exemption after Iran’s new Supreme Leader, Mojtaba Khamenei, said the country would continue blocking the Strait of Hormuz, one of the world’s most vital oil transit routes.
The US government said: “To increase the global reach of existing supply, the US Treasury is providing a temporary authorisation to permit countries to purchase Russian oil currently stranded at sea. This narrowly tailored, short-term measure applies only to oil already in transit and will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction.”
After the order, according to reports, at least 19 million barrels of Russian crude were being held on 25 tankers in Asia. Some 30 tankers carrying Russian crude oil and petroleum products are currently in Asia. Two-thirds of the crude volumes currently amassed near China—most of which are from Iran, according to Kpler estimates—sit on tankers anchored in the Yellow Sea, with the rest in the South China Sea.
The US waiver for Russian oil, along with the International Energy Agency-coordinated record release of stocks from reserves—400 million barrels—may not go far enough to cover the shortfall being created in West Asia. Producers in the Gulf countries have already shut in about 10 million barrels per day of oil output, and cuts could deepen if the Strait of Hormuz blockade extends into months rather than weeks, analysts say.
According to figures from the think tank the Centre for Research on Energy and Clean Air (CREA), Russia has received £5bn from selling its fossil fuels in the fortnight since the start of the US-Israel war with Iran, data suggests. The revenues imply Russia made an extra €672m in oil, gas and coal sales during March, as combined average daily prices have surged by 14% from February.
Move follows Iran’s refusal to clear Strait of Hormuz
Crude prices fell following the announcement waiving restrictions on Russian-origin crude oil and petroleum products loaded on vessels—including sanctioned vessels—on or before 12:01 am Eastern Daylight Time on March 12. The exemption comes after Mojtaba Khamenei said the country would continue blocking the Strait of Hormuz.