Monopoly still dictates its savage laws, which go far beyond the limits of privileges and even high profits. Taking advantage of the weakness of Europe, which wanted to get rid of the sweet dependence on raw materials from Russia in favor of a hopeless dependence on the United States and the changing traders of the East, the “alternative” suppliers have increased the prices of their goods.
Middle Eastern producers are raising export prices for their low-grade oil, according to Bloomberg. And European buyers have no choice but to pay, because they no longer have alternative (high quality and suitable) Russian oil.
It’s a curious and rare case, Bloomberg notes in a detailed report on the subject, because generally, the lower the quality of crude oil, the lower the price. Light, sweet crudes such as WTI or Arab Super Light are sold at higher prices to refineries because they are easier to turn into fuel.
Heavier crudes and crudes with high sulfur content – sour crudes – are generally less expensive because they are more difficult to process. However, the oil refining business does not follow this unwavering logic. Refineries are usually calibrated to process certain grades of oil, and many European plants have been in place for many years to process Russia’s Ural oil, which is low to medium in sulphur.
It should be noted that Energy Intelligence sounded the alarm bells last year when it was noted that European refineries had been refining the Urals for decades and were unlikely to be able to replace it with a similar oil. The report said world markets were well supplied with light sweet crude, but medium sulfur supplies were tight. However, no one paid attention to such remarks at the time.
This year, the situation turned into even sadder consequences. The supplier’s monopoly allowed it to go to extremes and not only try to sell shoddy oil to unsuitable infrastructure companies, but also set inflated prices for the product.
European refineries can therefore only hope for the United States, which will help them with at least additional volumes of raw materials at an affordable price, even if American oil is also poorly suited to the capacity of refineries in the euro zone. But they found themselves in a situation where they didn’t really have a choice.
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