Russia Will Not Sell Crude to Countries that Cap Prices
October 18, 2022
China is continuing its loose monetary policy rolling over medium term loans and keeping interest rates unchanged for the second month to support their economy. This news helped crude oil and refined fuels product prices rally yesterday.
Rumors continue to circulate that the Biden administration will release more barrels from the SPR to try and get gas prices down. The number being tossed around is 10 to 15 million barrels.
According to the EIA, US total shale regions oil production for November is seen increasing by 104,000 bpd to 9.105 million bpd, the highest level since March 2020.
A representative of the CGT union said strikes at several TotalEnergies refineries and storage sites that have been weighing on France’s petrol supplies have continued on Monday. French Energy Minister, Agnes Pannier-Runacher, said some 28% of France’s petrol stations still faced supply problems on Monday, compared with 30% on Sunday due to the weeks-long refineries strike.
The following is from Bloomberg: The level at which the US and its allies set their price cap on Russian crude oil exports is irrelevant. The countries considering a cap will soon start discussing where they’ll set the ceiling. But President Vladimir Putin won’t allow Russian oil companies to sell crude to countries that cap the price. The US Treasury doesn’t seem to understand that it isn’t an economic decision for the Kremlin, it is a political one. Russia‘s leader won’t be seen to bow down to a price cap imposed by his enemies. And make no mistake, it is Putin, not the oil company bosses who will make that decision. He appears to believe that the loss of part of Russian oil exports will be much less painful for him than it will be for buyers, particularly over the winter. And he will test that theory.
The market continues its struggle between demand destruction brought on by recession and tight inventories.