Key points
- Raising freight fees has encouraged non-sanctioned ships to transport
- Discount offer of ESPO presents incentives for price-sensitives traders
- Previous predictions estimated Brent crude oil surpassing $85 per barrel as a result of new sanctions
ISLAMABAD: Sweeping sanctions of the United States on Russia’s oil industry are not going to result in a “large hit” to Russian production, because higher freight charges and Moscow’s cheap crude support the trade, according to Goldman Sachs Group Inc.
According to Goldman Sachs Group Inc, increasing fees have lured non-sanctioned ships to transport Russian crude. It fills the gap left by blacklisted tankers, analysts including Callum Bruce wrote in a note dated January 24.
The increasing discount of European Sea Ports Organisation (ESPO) oil also presents strong incentives for price-conscious traders and refiners to continue buying.
Previous prediction
Brent crude oil prices could surpass $85 per barrel owing to new US sanctions on Russia.
In case, the Russian output declines and Iranian production dwindles as well simultaneously, prices might hit $90 per barrel.
The sanctions will impact Russian producers and ships, compelling Chinese and Indian refiners to look for oil from other regions, potentially raising costs.
Former US president Joe Biden imposed the broadest package of sanctions so far targeting Russia’s oil and gas revenues, in an attempt to give Kyiv and Donald Trump’s new administration leverage to finalize a deal for peace in Ukraine.
While the sanctions could increase oil prices, Goldman Sachs kept its best case scenario unaltered, predicting that Brent crude prices are going to range between $70 and $85 per barrel this year.
