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March 30, 2023
The European Union’s recent ban on imports of Russian oil has resulted in an over 400 percent increase in the cost of shipping refined oil, according to maritime news outlet gCaptain.
The EU announced the sanction on Russian oil imports earlier this month, as the one year anniversary of the Kremlin’s invasion of Ukraine approaches. The move has caused a global ripple effect, with the cost of moving refined oil increasing by 405 percent since February 5. The Baltic Exchange in London reported that the small oil tanker vessels have been raking in a daily profit of $55,857 in the last few days, partially due to the fact that demand is still up but Russian oil tankers are barred from shipping to the EU.
The small tankers are splitting their duties, with some servicing Russia and some servicing the European Union, causing a sharp spike in oil delivery costs. The ban on refined oil has proven to unfold the way Chief Energy Economist Tim Gould said it would at the 13th Global UAE Energy Forum in January. We need to be very watchful because the reconfiguration in global trade implicit in that oil product ban is going to be significantly more complex than what we have seen already on the crude side,” Gould warned at the time.
The ban on Russian refined oil is intended to further hamper Moscow’s efforts to replenish its war chest as it grinds on in its ongoing assault on Ukraine. The European Union has turned elsewhere for its diesel supply, looking to India, the United States and the Middle East, according to the Associated Press.
The national average price per gallon of regular fuel in the United States currently sits at $3.36, not far from its price a year ago, which hovered around $3.50 a gallon, according to GasBuddy.
ARTICLE: LAURA SPIVAK
MANAGING EDITOR: LUKE MOCHERMAN
PHOTO CREDIT: CSIS