OIL’S QUIET FLOW TO THE MARKET

In a continued attempt to reassert its relevance in global energy markets, the US once more expended ammunition at Russian oil majors Rosneft and Lukoil. The sanctioned companies are being dislodged from the US banking system starting November 21.

- RANJAN TANDON

Markets are being cautiously apprehensive as prices are firming up. However, informal estimates predict a movement in narrow band despite the imminent initial decrease in Russian oil flow.

Sanctions, a contentious issue, facilitate the resurrection of alternatives like the Russian ‘shadow fleet’. Moscow-based Transneft, the largest oil pipeline company with more than 70,000 km of network, handles 80 percent of pipeline supplies of Russian crude; it remains a major facilitator of oil exports to China, Finland, Germany and a few east European consumers. Embargoes often act as catalysts for surrogate corporate entities that circumvent restrictions and facilitate covert trade.

Meanwhile, fears of supply constraints are allayed with considerable OPEC capacity in abeyance. The Latin American flows are expected to surge in 2026. Stabroek Block, a massive field off Guyana’s shore operated by ExxonMobil and partners, is expected to report substantially higher production. Petrobras resumed production at the Tupi field while clocking record levels at Buzios, two of the most prolific pre-salt offshore assets in Brazil that are slated to place the country among the top five oil producers. With rising oil sands production in Canada and sustained shale activity in the Permian Basin, production will significantly increase in the next two years.