Supply-side issues continued to preoccupy oil markets at the start of May, after Russian crude exports to Central and Eastern Europe were hit by a contamination problem that caused disruption all along the supply chain. Problems with crude quality on Russia’s Druzhba (Friendship) pipeline began to emerge on April 18, and the pipe was subsequently shut down. The Czech Republic, Hungary and Poland responded by releasing emergency stocks. Exports from the Ust-Luga terminal on the Gulf of Finland were also disrupted. By May 2, clean Russian crude was again entering Eastern Europe via Belarus, although a full clean-up to deal with the consequences of the contamination is expected to take months. Although countries in the region have been trying to reduce their dependence on Russian oil, some reliance persists, particularly for landlocked refineries. Click to enlarge Alongside the Russian supply disruption, oil traders were also considering how the sudden gap in Iranian exports could be filled, after the US decided not to extend sanctions waivers. Nonetheless, crude oil futures shifted down later in the week, on expectations that the US, Russia and Saudi Arabia would step in, with a build-up of inventories in the US seen as a further… continue reading
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Source: CTRM Center