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Potential sanctions relief on Russia in case of a ceasefire or peace deal for Ukraine will not boost materially Russia’s oil supply to the market, according to Goldman Sachs.
As the U.S. and Russia launched talks on Ukraine and potential U.S.-Russia economic rapprochement, oil market participants and analysts have started to consider the possibility that if the peace talks are successful, sanctions on Russia’s oil exports could be eased.
Goldman Sachs, however, sees Russia’s oil supply to the market constrained by the self-imposed quota due to its participation in the OPEC+ production deal, not by sanctions.
“We believe that Russia crude oil production is constrained by its OPEC+ 9.0 million barrels per day (mbpd) production target rather than current sanctions, which are affecting the destination but not the volume of oil exports,” analysts at Goldman Sachs wrote in a Wednesday note carried by Reuters.
Earlier this week, Bank of America said that if the Ukraine talks result in a deal and a possible sanctions relief on Moscow’s crude oil and petroleum product exports, oil prices will ease by up to $10 per barrel for the Brent benchmark.
“Should sanctions relief allow it, we believe Brent crude oil prices could drop between $5 and $10/bbl if Russian barrels suddenly do not need to make a long journey to India or China, and more supply is suddenly made available,” analysts at BofA said in a note.
A potential sanctions relief could also depress refining margins globally amid higher diesel supply out of Russia, according to the bank.
Amid uncertainty in geopolitics and especially in U.S. foreign policy, speculation has increased in recent days that the OPEC+ group could postpone – again – the April start to easing the production cuts.
The alliance is considering pushing back the increase in supply despite calls from U.S. President Donald Trump that OPEC needs to lower oil prices, Bloomberg reported on Monday, quoting OPEC+ delegates.
However, Russian Deputy Prime Minister Alexander Novak said on Monday that OPEC+ has not discussed delaying the increase in its oil supply currently planned to begin in April.
