Sanctions against Russia have split the global oil market, fostering the growth of a "grey" market and pushing up prices, TotalEnergies CEO Patrick Pouyanne said Feb. 8 after the stepping up of measures against Moscow by the EU and G7 countries following the invasion of Ukraine.
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Referring to measures by the EU and G7, Pouyanne said at an investor presentation: "There is no more a world oil market. That is the big lesson of what's happening."
"We are splitting the market between Europe -- they have bans, there are some caps on prices -- we have today several markets, which does not help ease the price" of oil, Pouyanne said, going on to predict a potential return to prices above $100/b oil.
"We did not assess all the consequences of the growing grey markets for the supply of oil," he said.
On oil prices, Pouyanne said: "From our perspective there is more support for a higher price than $80 than a lower one. I would not be surprised to see $100/b coming back."
It follows the entry into force of an EU ban on Russian oil product imports on Feb. 5 and an earlier ban on Russian seaborne crude oil imports to the EU.
An agreement announced Feb. 3 by the G7 and partner countries will impose price caps of $100/b on imports of Russian products that typically trade at a premium to crude and $45/b on products like fuel oil that generally trade at a discount to crude.
TotalEnergies was previously stung by criticism that it was too slow to take a stance on the invasion of Ukraine and has since moved to dispose of several Russian assets. It retains, however, a 20% stake in Yamal LNG and continues to buy Russian LNG under a long-term offtake agreement.
In a fourth-quarter results statement, TotalEnergies noted an "uncertain environment," but also the efforts of the OPEC+ producer group to maintain prices above $80/b.
"The possible worldwide economic slowdown could be counterbalanced by the recovery of China, global demand being expected to rise in 2023 to more than 100 million b/d," the company said.
"Refining margins in Europe, particularly for distillates, are expected to remain supported by the effects of the European embargo on Russian petroleum products from Feb. 5."