Sour spot

摘要

Russia has an enviable position as a swing exporter to the world’s crude markets. Its pipeline network spreads east and west from Siberian oil fields, giving it flexibility to direct production to Asian or Atlantic basin markets. But the two markets have very different trading cultures, and the choice of which to supply is a strategic one, not simply picking the higher spot price. Russia’s oil industry consolidation has also left its leading producer Rosneft with large debts to service, giving it an incentive to tie up its supply in longerterm contracts. This leaves Russia with less leeway to promote its crude as a benchmark grade in future.