New Western measures aim to turn up the heat on Putin’s oil revenues. Analysts are underwhelmed
Freight wagons carrying oil and fuel at a petroleum products terminal in Riga, Latvia, on Feb. 2, 2023.
Bloomberg | Bloomberg | Getty Images
The West’s latest attempt to ramp up its oil war against Russia may cause some market dislocation, but some energy analysts remain far from convinced that the restrictions will constitute a “transformative event.”
An EU ban on Russian oil product imports came into effect on Feb. 5, following similar restrictions on EU crude oil intake, implemented on Dec. 5. The Group of Seven wealthy countries, the European Union and Australia on Friday on Friday set a ceiling for the price at which nations outside of the coalition may purchase seaborne Russian diesel and other refined petroleum products and still benefit from Western shipping and financial facilities.
The price cap coalition, which is composed of Australia, Canada, the EU, Japan, the U.K. and the U.S., seeks to deplete Russian President Vladimir Putin‘s war chest amid Moscow’s ongoing hostilities in Ukraine.
The EU and its G-7 allies said last week that it had set two price caps for Russian petroleum products — one is a $100 per barrel cap on products that trade at a premium to crude, like diesel, and the other is a $45 cap for petroleum products that trade at a discount to the same basis.
Some analysts warned that the measures could cause “significant market dislocations” and that the EU embargo was more complex and more disruptive than what had come before.
Not everyone shares this assessment.
“There is an overwhelming assumption that this will be a huge disruption to everything. I don’t really think this will be a transformative event,” Viktor Katona, lead crude analyst at Kpler, told CNBC’s “Squawk Box Europe” on Monday.
“I don’t really think that this will have the impact that a lot of people can imagine, and the main driver for this will be actually human creativity — and the constant search for a new solution, for a new supply chain or for a new route,” Katona said.
“This will bring us basically into the same story that we had with the oil price cap back in December. People expected a lot of things. In the end, it never really happened,” he added.
‘Russia may struggle to compensate fully’
As part of the sixth EU package of sanctions against Russia that was adopted in June last year, the 27-member bloc imposed a ban on the purchase, import or transfer of seaborne crude oil and petroleum products from Russia. The restrictions applied in early December and February, respectively.
Russian President Vladimir Putin chairs a meeting with members of the Security Council via a video conference on Feb. 3, 2023.
Pavel Byrkin | Afp | Getty Images
Asked whether those predicting significant market disruption because of the measures targeting Russia’s refined oil products were likely to be wide of the mark, Katona replied, “I think they are. I would say that the main development of the past two weeks when it comes to Russian diesel has been happening not in Europe, but in North Africa.”
Katona said North African countries were expected to receive at least 6 million barrels of ultra-low sulfur diesel from Russia, estimating that this was roughly one-quarter of what the European Union used to purchase from Moscow.
He explained that a “substantial transformation clause” remains under question because North African countries are not members of the price cap coalition.
“Basically, you drip one droplet of something else into a cargo of Russian diesel and it is already Moroccan, it is already Algerian, it is already Tunisian,” Katona said. “All of these countries have seen quite a substantial uptick in Russian diesel flows. And our expectation is that Feb. 5 kicks in, and there will be a lot of flows from North Africa, basically Russian in all but name.”
Ahead of the Western ban on its oil supplies, the Kremlin reaffirmed its opposition to the measures and warned that it would cause further market imbalances.
“It will lead to further imbalances on the international energy markets,” Kremlin spokesman Dmitry Peskov told reporters Friday, according to Russian news agency Tass. “Naturally, we are taking precautions to protect our interests from the risks associated with it.”
Energy analysts at political risk consultancy Eurasia Group said that the latest wave of Western sanctions was likely to dislocate flows rather than cause a severe disruption of supplies, noting that oil-product markets have had several months of advance notice to prepare for the restrictions.
“Still, while flows are readjusting, some disruption is possible, especially in the middle distillate market, which was already tight before the latest sanctions,” analysts at Eurasia Group said in a research note.
“Russia may struggle to compensate fully for the loss of EU buyers, especially if a recovering China stops exporting so much surplus fuel and instead starts to import significant quantities again,” they added.
‘Shipments will take longer’
“This is a very substantial disruption to really a key industrial field across much of the euro zone,” Edward Bell, commodities analyst at Emirates NBD, told CNBC’s “Capital Connection” on Monday.
“Russia was the dominant external supplier of diesel to euro zone economies, so the fact that this embargo is now in place means that there will be a little bit of a readjustment and scrambling to get those additional barrels.”
Bell said it appears as though Russia has so far been able to find new markets or expand diesel exports to historical markets, such as to Turkey and partners in North Africa and Asia. “All this means those shipments will take longer,” he added.
“This is not a positive indicator in terms of the direction for prices going downward and easing the burden of energy prices on consumers but in terms of actually disrupting supply it doesn’t like we are in any kind of panic stations just yet.”
Bell suggested Saudi Arabia’s diesel exports to Europe could be set for a “big uptick,” following the West’s embargo on Russian petroleum products.
Environment
U.S. crude oil falls below $60 a barrel to lowest since 2021 on tariff-fueled recession fears
A view shows disused oil pump jacks at the Airankol oil field operated by Caspiy Neft in the Atyrau Region, Kazakhstan April 2, 2025.
Pavel Mikheyev | Reuters
U.S. oil prices dropped below $60 a barrel on Sunday on fears President Donald Trump’s global tariffs would push the U.S., and maybe the world, into a recession.
Futures tied to U.S. West Texas intermediate crude fell more than 3% to $59.74 on Sunday night. The move comes after back-to-back 6% declines last week. WTI is now at the lowest since April 2021.
Worries are mounting that tariffs could lead to higher prices for businesses, which could lead to a slowdown in economic activity that would ultimately hurt demand for oil.
Oil futures, 5 years
The tariffs, which are set to take effect this week, “would likely push the U.S. and possibly global economy into recession this year,” according to JPMorgan. The firm on Thursday raised its odds of a recession this year to 60% following the tariff rollout, up from 40%.
Fueled by incentives from the Illinois EPA and the state’s largest utility company, new EV registrations nearly quadrupled the 12% first-quarter increase in EV registrations nationally – and there are no signs the state is slowing down.
Despite the dramatic slowdown of Tesla’s US deliveries, sales of electric vehicles overall have perked up in recent months, with Illinois’ EV adoption rate well above the Q1 uptick nationally. Crain’s Chicago Business reports that the number of new EVs registered across the state totaled 9,821 January through March, compared with “just” 6,535 EVs registered in the state during the same period in 2024.
Those numbers represent more than 50% growth in EV registrations – far beyond the expected 12% first-quarter increase nationally being projected by Cox Automotive. (!)
What’s going on in Illinois?
While President Trump and Elmo were running for re-election, they campaigned on the threat promise of canceling the $7,500 federal tax credit for EVs. Along with California Governor Gavin Newsom, Illinois’ Governor JB Pritzker made countermoves – launching a $4,000 rebate for new electric cars and up to $1,500 for the purchase of a new electric motorcycle.
At the same time, the state’s largest utility, ComEd, launched a $90 million EV incentive program featuring a new Point of Purchase initiative to deliver instant discounts to qualifying business and public sector customers who make the switch to electric vehicles. That program has driven a surge in Class 3-6 medium duty commercial EVs, which are eligible fro $20-30,000 in utility rebates on top of federal tax credits and other incentives (Class 1-2 EVs are eligible for up to $7,500).
We covered the launch of those incentives when the program was announced at Chicago Drives Electric last year, but the message here is simple: incentives work.
SOURCES: Chicago Business, Ray Cunningham; featured image by the author.
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The electric construction equipment experts at XCMG just released a new, 25 ton electric crawler excavator ahead of bauma 2025 – and they have their eye on the global urban construction, mine operations, and logistical material handling markets.
Powered by a high-capacity 400 kWh lithium iron phosphate battery capable of delivering up to 8 hours of continuous operation, the XE215EV electric excavator promises uninterrupted operation at a lower cost of ownership and with even less downtime than its diesel counterparts.
XCMG is delivering on part of that reduced downtime promise with the lower maintenance and easier repair needs of electric equipment, and delivering on the rest of it with lickety-quick DC fast charging that can recharge the machine’s massive battery in 1.5-2 hours … but that’s not the slick bit. The XCMG XE125EV can be powered up without leaving the job site thanks to its BYD battery swap technology.
We first covered XCMG and its battery swap technology back in January, and covered similar battery-swap tech being developed by MOOG Construction offshoot ZQUIP, as well – but while XCMG’s battery tech has been in production for several years, it’s still not widely known about in the West (even within the industry).
XCMG showed off its latest electric equipment at the December 2024 bauma China, including an updated version of its of its 85-ton autonomous electric mining truck that features a fully cab-less design – meaning there isn’t even a place for an operator to sit, let alone operate. And that’s too bad, because what operator wouldn’t want to experience an electric truck putting down 1070 hp more than 16,000 lb-ft of torque!?
Easy in, easy out
The best part? All of the company’s heavy equipment assets – from excavators to terminal tractors to dump trucks and wheel loaders – all use the same 400 kWh BYD battery packs, Milwaukee tool style. That means an equipment fleet can utilize x number of vehicles with a fraction of the total battery capacity and material needs of other asset brands. That’s not just a smart use of limited materials, it’s a smarter use of energy.
You can check out all the XE215EV’s specs at this tear sheet, and get an in-person look at the Chinese company’s latest electric excavator this week in Munich, Germany.
SOURCE | IMAGES: XCMG.
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