According to Bloomberg oil strategist Julian Lee, Russian President Vladimir Putin has found another weapon that can be used against european countries backing Ukraine – Kazakhstan’s crude oil , which will cost Russia little cost.
Europe will start imposing sanctions on Rosneft on December 5, and the grace period is slowly shortening. Meanwhile, the G7 is considering a price cap on Russian crude exports, and Putin has started retaliating early.
A Novorossiysk city court has ordered the Caspian Pipeline Consortium (CPC) to stop shipments from its Black Sea export terminal for a month as punishment for violating oil spill regulations.
The benefit of this move, from Russia’s perspective, is that it is not Russian crude that cuts exports, but crude from neighboring Kazakhstan. An already tight market will again cut crude supplies by almost 1.5 million barrels per day at almost no cost to Russia. crude oil from Russia accounts for only about 10% of CPC exports, which can be diverted to other channels.
The European market will be even worse, as about 2/3 of the CPC crude oil will end up in the European market. By halting CPC exports, even for a short period of time, Russia could punish Western sanctions by stimulating already high crude oil prices , and potentially boost national income from its nearly intact exports , Julian Lee said .