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OIL: High Freight Rates and ESPO Discount Support Russia Crude Exports: Goldman

OIL
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Goldman Sachs said a big drop in Russian production due to sanctions is not expected as higher freight rates incentivize non-sanctioned ships to move Russian oil and with a deepening discount on ESPO crude.

  • Rising freight rates are encouraging non-sanctioned ships to move Russian crude, replacing export volumes previously shipped by sanctioned ships.
  • Total Russia crude exports remain fairly stable.
  • The ESPO discount supports price-sensitive traders and refiners to continue purchasing Russian crude.
  • Russian oil revenues are estimated to have edge modestly higher since the latest sanctions.
  • Western policymakers are expected to prioritize maximizing discounts instead of reducing Russian volumes.
  • Uncertainty of the impact of sanctions is high with certain wind-down transactions authorized through March 12.
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Goldman Sachs said a big drop in Russian production due to sanctions is not expected as higher freight rates incentivize non-sanctioned ships to move Russian oil and with a deepening discount on ESPO crude.

  • Rising freight rates are encouraging non-sanctioned ships to move Russian crude, replacing export volumes previously shipped by sanctioned ships.
  • Total Russia crude exports remain fairly stable.
  • The ESPO discount supports price-sensitive traders and refiners to continue purchasing Russian crude.
  • Russian oil revenues are estimated to have edge modestly higher since the latest sanctions.
  • Western policymakers are expected to prioritize maximizing discounts instead of reducing Russian volumes.
  • Uncertainty of the impact of sanctions is high with certain wind-down transactions authorized through March 12.