Fundamentals

Overview: War Sets Off Oil’s Great Migration

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The world is facing a number of oil shocks from Russia’s invasion of Ukraine. The first is the drastic rerouting of crude around the globe. As long as there is war, Russian Urals will sell at a steep discount — now $25 per barrel versus dated Brent — to ship its oil to Asia, to China and India, instead of 2.4 million barrels per day to Europe. This allows more Mideast and US crude to sail to the Atlantic Basin. Asia won’t buy all surplus oil, which will cause Russian exports to drop, even as they could eventually move on ghost ships to unknown buyers. The crude migration could run around 1 million b/d.

Topics:
Oil Prices, Oil Futures and Derivatives, Oil Demand, Oil Supply, Oil Trade, Oil Forecasts
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