How Could Russia Bendefit from Suez Canal Blockage?
Russia can use the Suez Canal blockage to introduce its Northern Sea Route as a worthy alternative and ward off multiple sanctions over Nord Stream 2.
Currently, there are over 300 million of USD worth of oil products in tankers waiting for the clearing of the blockage that occurred due to the grounding of the Ever Given container ship. But Moscow is hoping that this unfavorable circumstance would turn into a long-term gain.
Russia is one of the biggest exporters of Crude Oil via canalDespite the efforts made to dislodge the above vessel there is a little progress with moving the stuck ship. It is expected that the progress could well be extended into April.
About $10 billion worth of goods pass through the canal every day which is 12% of global trade. Besides, it cuts 15 days off the journey time around Africa for vessels travelling from Europe to Asia.
Since Russia is the biggest exporter of crude oil products the grounding of container ship in the canal affects Russian export badly. According to an average calculation Russia ships around 550 000 barrels of oil through the canal. It is about 5% of Russia’s total oil products, with a market value nearing $35 million.
The contingency requires alternative routesAt the moment six tankers travelling from Russia have been held up in the unexpected congestion. They are carrying 3.2 barrels of crude oil, which is worth around $195 million, and 1.2 million barrels of clean petroleum product (Naphtha) worth of $95 million.
The Vrtexa,’s senior analyst, Arthur Richier, said that refineries in Asia are in desperate need of Naptha and Russian Naptha is preferable to its quality. For the last 15 months, nearly 240 000 barrels of clean oily products were shipped from Russia to the Middle East and beyond every day. So the current circumstance will definitely impact the delivery of petroleum products to Asia.
Northern Sea Route could be the way outThe refineries located in Asia will probably soon run out of their crude oil stocks while waiting for the delayed tankers from Russia and Europe.
The congestion that occurred in the canal has caused concerns over the oil prices that might have slightly increased. And some of the gloomy predictions have come true when Brent oil raised up for more than 3% to about 65 USD a barrel on Friday trading.
The navigation map showed that some tankers have decided to avoid going through the canal and started a long journey around Africa. With the cost for chartering of about 25000 USD a day the entrepreneurs and oil traders are wandering which way to go – wait for the clearance of canal or sale around the south tip of Africa.
On the other side of the canal there are many of those Russian tankers waiting for their return back home. Among them are Novatek gas-carrying vessels.
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