(MENAFN- AzerNews) By trend
EU approved price cap of $60 per barrel for Russia's oil
supplies, which came in force from December 5, has not yet shown
its full impact.
The initial restriction concern only seaborne oil from Russia,
while, from February 5, a cap on refined petroleum products will be
set. However, the embargo does not apply to Russia's oil imports
coming to the EU through pipelines. The Druzhba oil pipeline
exports still remain.
As Charles Michel, President of the European Council, said, the
ban covers more than two-thirds of Russian oil imports coming into
the bloc.
The International Energy Agency (IEA) in its latest market
review said that, before the ban kicks in, the EU needs to switch
an additional 1.3 million barrels per day of seaborne and pipeline
volumes. At the same time, the IEA also predicts the cut of 1.4
million barrels per day in Russia's oil production next year.
Thus, this price cap has created numerous uncertainties and
logistical challenges for the global energy market.
As Allan Mustard, co-founder and co-head of the Trans-Caspian
Resources energy startup, Former US Ambassador to Turkmenistan,
told trend , it remains to be seen whether price caps
will have any impact at all.
“Speaking generally, embargoes disrupt normal trade flows, so
naturally prices tend to rise. Bear in mind that the refined
product embargo doesn't take effect until February 5th. For the oil
embargo, which took effect December 5th, it remains to be seen if
this takes supply out of the market. There are alternatives that
Russia may use, such as using“dark fleet” tankers, similar to how
Iran and Venezuela have sold oil under sanction. If supply comes
off the market, the impact on refined products will depend on
whether alternative supplies come on the market (e.g., from OPEC or
others) to make up for lost oil,” he said.
According to Mustard, there will be no impact on refining until
we see an actual reduction in supply, which will reduce the use of
refining.
“If that happens, I would expect prices to rise. This is about
displacement in the market and the ability of other
countries/companies to make up the difference, which is typical of
embargoes,” he explained.
As for the impact on Azerbaijan's oil exports, the ambassador
pointed out that the demand for Azerbaijani crude will be
stronger.
“This sequence of events justifies the far-sighted investment in
the Baku-Tbilis-Ceyhan (BTC) pipeline and in the Southern Gas
Corridor (SGC), and in my view justifies additional investment in
similar infrastructure that will allow larger exports of Caspian
Basin hydrocarbons to the West,” he said.
Mustard noted, that, although the deployment of renewable energy
sources, which is also envisaged in Azerbaijan's strategy for
upcoming years, is fast, it will not be able to fully replace
hydrocarbons for at least another thirty years, and Europe in the
meantime doesn't want either to freeze in the winter or shut down
its industries.
Meanwhile, according to the State Customs Committee, almost
22,682,798 tons of crude oil and oil products worth $17.180 billion
were exported from Azerbaijan from January through October 2022,
compared to 23,800,444 tons ($11.220 billion) over the same period
of 2021.
Thus, Azerbaijan's revenue from the export of crude oil and oil
products increased by 53.1 percent year-on-year.
The share of crude oil and oil products in Azerbaijan's total
exports in the reporting period amounted to 49.49 percent, compared
to 66.59 percent a year earlier.
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Tags: azerbaijan eu oil prices