China Pausing on Buying Russian Seaborne Crude After Invasion
Importers waiting for clarity on cargo financing, payments
Freight costs for loading from Black Sea surge on risks
Oil importers in China, the world’s biggest buyer of Russian crude, are briefly pausing new seaborne purchases as they assess the potential implications of handling the shipments following the Ukraine invasion.
Regular buyers of Russian crude that load from the Far East ports said they will stay on the sidelines until more clarity on cargo financing and payments is available, according to Chinese refiners and traders who sell into the region. Separately, freight costs for cargoes loading from the Black Sea have tripled as shippers shunned the region due to security risks.
While Russian energy exports were spared from U.S. sanctions, some European banks such as ING Groep NV and Rabobank have begun to impose restrictions on commodity-trade finance linked to the two countries. Others lenders are also scaling back their exposure by limiting the issuance of letters of credit against cargoes that originated in Russia.
The U.S. and its Western allies, however, stopped short of limiting Russia’s access to Swift, a messaging platform integral to international orders and payments, which means settlement in dollars and euros can continue.
Chinese buyers are taking a short pause as they wait for more clarity to emerge in the coming days, said the refiners and traders. Companies don’t want to be caught in a situation where they have no choice but to pay much more to ship a cargo, or be entangled in payment issues, they added.
https://www.bloomberg.com/news/articles ... r-invasion
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