Oil Market to Get Even Tighter on Russia Disruptions, Says Vitol

“It is not illegal to purchase Russian oil yet,” said Muller. “However, the means to do so are being tightened.”

Oil Market to Get Even Tighter on Russia Disruptions, Says Vitol
Source: ENB

Global oil markets could tighten even more with Russian flows being disrupted and producers such as Libya experiencing supply problems, according to Vitol Group, the world’s biggest independent crude trader.

That could push prices higher still after they soared to more than $115 a barrel in the wake of Russia’s invasion of Ukraine.

“We have plenty of twists and turns to come,” Mike Muller, Vitol’s head of Asia, said Sunday on a podcast produced by Dubai-based consultant and publisher Gulf Intelligence. “While I think the world is already pricing in the fact there’ll be an inability to take in a serious amount of Russian oil in the western hemisphere, I don’t think we’ve priced in everything yet.”

His views echo those of several commodity hedge funds and Wall Street banks such as Goldman Sachs Group Inc., which says oil could reach $150 in the next three months.

 

Tight Oil Marketss
Source: Bloomberg

The market could see “steeper backwardation,” Muller said, referring to a bullish pattern whereby near-term futures are more expensive than later ones because physical traders are rushing to secure supplies as soon as possible. The one-month time spread for Brent is already at the highest level of backwardation in at least a decade.

Crude surged last year as global economies and energy demand rebounded from the coronavirus pandemic. It’s up another 50% in 2022.

Energy exports have been exempted from U.S. and European sanctions on Moscow. But traders, shippers, insurers and banks are increasingly wary of taking on or funding purchases of Russian barrels. The country, which normally exports about 5 million barrels of crude every day, saw its Urals grade offered at record discounts last week.

Source: Bloomberg

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Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat. Stuart is on Board Member of ASN Productions, DI Communities Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.