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30 May 2023

Here's Why Oil Flows Can Only Be Redirected, Not Stopped

Global crude flows have shifted completely in a relatively short period of time. Because of the resilience of oil demand Russia’s oil revenues are recovering, too. West-African crude flows to Asia have dropped as Chinese buyers are increasingly buying Russian and Iranian crude.

Asian oil imports were due for a marked rebound this month after the end of the maintenance season. Chances are that a lot of the additional oil would be coming from Russia, which has become one of the largest suppliers of China and India.

In fact, Russian oil flows are growing despite claims from Moscow that it has reduced its total oil production. According to Bloomberg, Russian oil exports actually hit the highest since the start of 2022 last month.

This is happening in the context of the most severe sanction push by the collective West against the country. And it is the clearest evidence yet of just how essential oil is for the functioning of the global economy.

Before the invasion of Ukraine, Russia’s biggest oil clients were European countries. For China and India, it was a minor supplier. Since last year this has changed dramatically.

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