Russia is cutting capacity on a key pipeline that brings crude to the global market, sending prices soaring and stoking fears that Moscow is ready to retaliate against Western sanctions by restricting supplies. own energy supply.
Russia’s deputy energy minister said in a statement on Tuesday carried out by the Tass news agency.
Supply disruption occurred on the eve of US President Joe Biden trip to Europe, where EU countries are expected to discuss imposing sanctions on Russia’s oil sector in response to its invasion of Ukraine. The United States has banned the import of Russian gasoline.
International oil prices rose more than 2% to $117 per barrel shortly after the pipeline announcement before falling back to $115 per barrel.
Analysts questioned the timing of the damage reported by the storm, as none of the pipeline’s western partners were able to inspect the facilities.
“If a hurricane shuts down infrastructure or if Russia shuts down infrastructure, Russia could decide to take a decision,” said Kevin Book, chief executive officer of ClearView Energy Partners, a Washington-based research group. determine when the country will reopen its infrastructure.”
The pipeline, which runs 1,500 kilometers from the massive Tengiz oil field in western Kazakhstan to the port of Novorossiysk on Russia’s Black Sea coast, includes oil produced by the US super carriers Chevron and ExxonMobil. Russian crude also supplies supplies from oil fields along the route.
Total pipeline capacity is about 1.4 million bpd – accounting for about 2.5% of global seaborne oil trade – and accounts for about two-thirds of Kazakhstan’s oil exports, making it a vital lifeline of the country’s economy.
The CPC said in a statement that “current market conditions,” a clear reference to recent Western sanctions, would make it difficult to repair parts of damaged port handling facilities. Damage during a recent storm would be more difficult, meaning shipments could be cut by two-thirds.
“Russia can make repairs happen very difficult given the challenges it is currently facing in selling its own oil,” said Amrita Sen, oil analyst at Energy Aspects.
An executive order by the Biden administration this month banned imports of Russian crude oil into the US but exempted the oil from flowing through the CPC pipeline as long as it was certified as coming from Kazakhstan.
ExxonMobil and others have continued to ship through it. Mike Wirth, chief executive officer of Chevron, said earlier this month that the CPC pipeline is “an important source of supply. . . into a world that really needs that oil supply right now.”
The Russian state is the largest shareholder of CPC with a 24% stake. Chevron and Exxon are among other shareholders with a 15% and 7% stake, respectively. A joint venture between Russian state-controlled oil producer Rosneft and Shell owns another 7.5% stake.
Analysts say Western moves to increase sanctions against Russia could trigger retaliation from Moscow.
“As the EU moves closer to imposing strict measures on Russian oil exports. . . ClearView Energy Partners said in a note.
