The critics were quick to pounce when the EU banned imports of Russian crude and products and the EU and G-7 implemented price caps. It won’t work, they said. There won’t be enough ships to keep Russian trade flowing. Russian diesel and crude production will get shut in. It will lead to a global shortage, causing prices for consumers and businesses to spike. The sanction plan will backfire on Western governments.
None of this happened. The Western plan is working as designed. Russia is being forced to accept steep discounts on its crude and diesel, and its exports continue to flow.
According to Kpler, Russia exported 2 million barrels per day (b/d) of clean products in March. That was the highest volume since Kpler began keeping records in 2016. Russia’s crude exports in March averaged 3.54 million b/d, at the high end of the historical range.
Russia’s oil-discount loss is being transformed into tanker shipping’s freight-rate gain. Russian crude and diesel loads are having to travel much longer distances. Owners of tankers carrying Russian cargoes are obtaining very large freight premiums.