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Russia chokes major oil pipeline in further threat to global supplies

Russia is reducing capacity through a major pipeline that sends crude oil to global markets, raising prices and raising fears that Moscow was willing to respond to Western sanctions by halting its energy supply.

Up to a million barrels of oil a day shipped through the pipeline of the Central Asia Black Sea Consortium could cut up to two months while repairs are made to storm-damaged loading facilities, Russia’s deputy energy minister said in a statement issued Tuesday by Tass news agency.

The supply cut comes 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 the country’s invasion of Ukraine. The US has already banned Russian oil imports.

International oil prices rose more than 2% to $ 117 a barrel immediately after the announcement of the pipeline before dropping back to $ 115 a barrel.

Analysts have raised questions about the timing of the reported storm damage, as none of the pipe’s Western partners were able to inspect the facilities.

“If a storm shuts down infrastructure or if Russia shuts down infrastructure, Russia can decide when it will reopen infrastructure,” said Kevin Bock, CEO of ClearView Energy Partners, a research group from Washington.

The pipeline, which runs 1,500 km from Tangiz’s mighty oil field in western Kazakhstan to the port of Novorossiysk on Russia’s Black Sea coastline, includes oil produced by US super-heads Chevron and Exxon leads. Russian oil also feeds the line from oil fields along the route.

The total pipeline capacity is about 1.4 million oil per day of oil – about 2.5% of global marine oil trade – and accounts for about two-thirds of Kazakhstan’s oil exports, making it a vital artery for the country’s economy.

The CPC said in a statement that “current market conditions”, ostensibly a reference to recent Western sanctions, would make it difficult to repair parts of the port’s loading facilities damaged during the recent storm, meaning shipments could be cut by two-thirds.

“Russia can make it very difficult for repairs to occur given the challenges it currently faces in selling its own oil,” said Emerita Sen, chief oil analyst at Energy Aspects consulting firm.

An order issued by the Biden administration this month banned Russian crude oil imports to the U.S., but exempted oil flowing through the CPC pipeline as long as it was approved as coming from Kazakhstan.

ExxonMobil and others continued to ship through it. Mike Wirth, CEO of Chevron, said earlier this month that the CPC pipeline is “an important source of supply. . . To a world that currently really needs this oil supply. “

The Russian country is the largest shareholder of CPC with shares of 24%. Chevron and Exxon are among the other shareholders with 15% and 7% holdings, respectively. A joint venture between Russian-controlled Russian oil producer Rosneft and Shell holds an additional 7.5 percent.

Analysts have said Western moves to increase sanctions on Russia could provoke retaliation from Moscow.

“As the EU approaches imposing restrictions on Russian oil exports… A ‘rupture’ noise could anticipate Moscow’s cut-off flow to the West itself,” ClearView Energy Partners said in a comment.

Russia chokes major oil pipeline in further threat to global supplies Source link Russia chokes major oil pipeline in further threat to global supplies

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