Why Russian oil can't find buyers even as crude nearly touches $120 a barrel
Call it a “buyers strike” or “self-sanctioning,” but Russian crude is being shunned in the physical market even as a scramble for barrels sends oil futures to their highest levels in years.
“The current central bank sanctions and selective SWIFT action is causing major risk aversion by key market participants,” said Helima Croft, head of global commodity strategy at RBC Capital Markets, in a Thursday note.
The U.S. and its allies have imposed tough sanctions on major Russian banks, blocking them from the crucial SWIFT interbank messaging service, and have also targeted the nation’s central bank. The efforts are aimed at effectively ejecting Russia from the global financial system in response to Vladimir Putin’s decision to invade Ukraine.
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Nevertheless, energy companies, trading houses, shipping companies, and banks have all backed away from the Russian energy business, Croft noted, adding that the country’s “already staggering” export losses could hit 3 million to 4 million barrels a day if Western powers follow through and impose the sort of energy-focused “secondary sanctions” that were aimed at Iran.
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