UBS: sanctions reroute Russian crude, barely dent export volumes
UBS chief economist Arend Kapteyn finds that Russian crude export volumes sit only around 10% under pre-war figures, as sanctions have mostly shifted buyers rather than shrinking worldwide supply.
In a research piece titled “Who Is Buying Russia’s Oil?”, Kapteyn reported that the European Union’s portion of Russian crude purchases dropped from 48% before the Ukraine invasion to just 4% as of September. During that same window, China, India and Turkey together saw their combined intake rise from 29% to 77%.
Within China, the proportion of mineral fuel imports sourced from Russia increased from around 18% pre-conflict to 27% afterward, displacing shipments from countries including Australia, Iran, South Korea, Saudi Arabia, Singapore and the bloc of EU nations. India’s imports told a similar story: Russia’s slice grew from barely above 1% to 24%, squeezing out Nigeria, Iran and Saudi Arabia as suppliers.
According to Kapteyn, roughly 61% of Russia’s crude shipments now travel via a so-called shadow fleet of tankers that sit outside Western insurance and financing networks, diminishing how effective the G7’s price-cap mechanism can be. He pointed out that sanction regimes only bind the specific countries that enacted them, rather than applying worldwide.
Russia has also begun bringing in notable quantities of refined fuel products — a striking turnaround for a nation that ranks among the planet’s top exporters of diesel, fuel oil and naphtha. Kapteyn attributed this shift to Ukrainian drone attacks targeting Russian refining facilities, calling it a contributor to elevated gasoline prices globally.
Kapteyn’s overall assessment was that sanctions and military strikes have chiefly redirected where Russian oil ends up rather than pulling barrels out of circulation entirely, restraining the true impact of both financial penalties and physical pressure on Moscow’s export activity.
Source: OilPrice.com