Oil markets worry about supply shock as some buyers shun Russia

As the West debates possible restrictions on Russian oil and gas, there are signs that some buyers are already avoiding them, fueling market nervousness about a possible big hit to supply.

Russia is the world’s leading exporter of crude oil and petroleum products combined, with around seven million barrels per day (bpd) or 7% of global supply.

While Western governments have imposed unprecedented sanctions on Moscow over its invasion of Ukraine, they have so far not directly targeted its energy sector because of the damage it would inflict on their own economies.

However, two people familiar with the matter told Reuters the United States was willing to go ahead with a ban on Russian oil imports without European allies.

And some buyers appear to be avoiding Russian oil anyway to avoid reputational damage or potential legal trouble, though estimates vary widely on how much is going on.

shell it said on Tuesday it would stop buying Russian crude and phase out its stake in all Russian hydrocarbons, becoming one of the first major Western oil companies to leave Russia entirely.

Meanwhile, Goldman Sachs estimated that more than half of the Russian oil exported from the ports remained unsold.

“If maintained, this would represent a three million bpd decline in Russia’s seaborne exports of crude oil and oil products.“, he claimed.

JPMorgan he estimated that about 70% of Russian seaborne oil was having difficulty finding buyers.

“Shipping disruptions in the Black Sea have brought trade deals with the country to a virtual standstill.”, the bank noted.

The analysts of BCAResearch They also said that some private companies were boycotting Russian energy, but so far they saw little impact.

“Estimates vary, but so far around 20% of Russia’s oil exports could be affected”, BCA said, adding that Russian crude could still reach markets such as China.