The EU's upcoming ban on Russian crude could shift 1 million barrels a day to these 7 nations next year, energy researcher says
- Roughly 1 million barrels of Russian crude could be redirected come 2023 as Europe's new sanctions kick in.
- Energy research firm Kpler broke down potential destinations where Russian oil could pivot to as Moscow seeks new markets.
Once Europe's partial ban on Russian oil kicks in this December, the direction of those crude flows could change dramatically as Moscow seeks new buyers for its excess barrels.
In a Friday note by Kpler's Viktor Katona, the research firm highlighted seven different nations other than China and India that could see an uptick of Russian oil deliveries in 2023.
Indonesian President Joko Widodo has acknowledged the potential for buying Russian oil, and Kpler sees the country as a top prospect for a surge in imports from Russia.
"Very much alike India, Jakarta is seeing discounted barrels as a way of mitigating inflation – after the government hiked fuel prices by 30% in early September (as the country's $34 billion subsidy system was getting untenable), inflation worries have come to the forefront again," according to the note.
The last time an Indonesian refiner purchased a Russian crude cargo was December 2016. In Kpler's view, Indonesia could see a potential influx of 100,000 to 150,000 Russian crude barrels per day.
Pakistan, too, has publicly weighed buying Russian crude, Kpler explained, as the government in Islamabad has reportedly asked the nation's refiners to consider buying discounted supplies from Russia as crude prices soar.
Still, there are some reservations.
"Given that Pakistan is effectively buying crude from two Middle Eastern producers – Saudi Arabia and the UAE – it remains to be seen whether domestic refiners would risk antagonizing their relationship," Kpler said.
Pakistan could see a jump of roughly 50,000 to 100,000 additional barrels per day from Russia.
Kpler anticipates that Brazil's October elections will rejuvenate its international ties to so-called BRICS nations, of Brazil, Russia, India, China and South Africa.
Meanwhile, Brazil has ramped up its intake of domestic production throughout 2022 and flows to domestic markets are at their highest since 2019. At the same time, its exports have dipped slightly.
"Given that Urals is of very similar quality to Brazil's Tupi or Buzios (same density, higher Sulphur content), refining a discounted crude could free up a substantial portion of Brazilian production to maximize profits," Kpler's Katona wrote.
Brazil could have see an uptick of roughly 100,000 to 200,000 barrels per day from Russia moving forward, according to Kpler.
Historically, South Africa has only had one delivery of Russian crude, which came earlier this summer, according to Kpler. But its status as one of Russia's BRICS peers means it stands as a likely candidate for higher volumes.
What's more, the nation's Natref refinery, Kpler noted, is less likely to self-sanction from doing business with Moscow compared to BP- and Shell-owned Sapref.
There could be a potential impact of 50,000 to 100,000 barrels per day flowing from Russian ports to South Africa.
Since August, Kpler reports that Sri Lanka has already started buying one cargo per month of Russian crude, and the research firm expects this pace to continue moving forward.
As it deals with massive debt and political turmoil, Sri Lanka's oil imports are set to remain depressed, but that could open it up for a small increase in crude deliveries from Russia.
Kpler said the nation could see a marginal increase of about 20,000 to 30,000 Russian barrels per day.
Saudi Arabia and Kuwait
It's unclear whether any Middle Eastern nations will step up as buyers of Russian crude, but Kpler noted that refineries in Saudi Arabia and Kuwait in particular will be operating at full tilt once Europe's new sanctions begin.
"Given that these refineries will be effectively reducing exportable volumes, all this in a period of elevated crude prices, the temptation might be to feed Urals into the refineries and let the likes of Arab Light flow freely in Asia," Kpler wrote.
The potential impact for these Middle East countries are both the highest and lowest, with a range of zero to 500,000 barrels per day flowing from Russia.
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