Will the growing Russian crude surplus clear into Asia?

"Self-sanctioning" from European, Japanese and South Korean refiners has resulted in surplus of Russian crude in the market. This has already led to record price discounts for Russian spot crude prices. At such steep discounts, we should see a diversion of displaced Russian crude towards Asia. We estimate that about 650,000 b/d of Russian crude would need to be diverted from Europe, Japan and South Korea. Asia can accommodate these volumes by processing less Middle East crude. However, term contracts may make it tough for Asian refiners to immediately replace Middle East crudes. Russian crudes will have to displace crude from other sources such as Africa and the US. This insight aims to: Estimate the current surplus of major Russian export grades: Urals, ESPO and Russian light grades. Evaluate the likely volumes of Middle East grades in Asia that can be displaced Present changes to global crude trade to rebalance the market