The closure of the Russian oil pipeline and export terminal as well as the move to want payment in Roubles, are all likely tactics from Putin to cause more market chaos in an attempt to hit back over sanctions. While Russia likely needs the oil and gas revenues, sending oil higher is likely intended to see whether the West cracks, which seems unlikely. The Rouble payment is also meant to inconvenience the West but at the same time maybe support the Rouble as West Europe needs the gas and will need to buy Roubles to may payments.
Source: Bloomberg, C-MACC Analysis, March 2022
We talked about high refining margins earlier in the week, and as operating rates move higher the refiners should show very significant profit increases in May. This may shine a negative light on the group as they may be targeted for overcharging for gasoline, although they are generally reacting to traded gasoline volumes in a relatively fungible market.
Source: Bloomberg, C-MACC Analysis, March 2022
The consensus at the WPC in Houston is that prices are likely to stay high and that consumers are going to have to get used to higher costs – especially when you overlay the significant industry costs that may be coming in response to the need to address emissions. For more see today's daily report.
