Syria’s oil exports have come to a standstill due to sanctions and this may force a cut in production, weakening President Bashar Al Assad’s ability to generate cash but not threatening his grip on power yet, traders and analysts say.
After a series of piecemeal measures, European governments have acted vigorously in recent weeks to tighten the screws on Assad in hopes of reining in his bloody crackdown on protesters, which has killed some 2,700 people in six months, the UN says. The EU will ban European firms from making new investments in Syria’s oil industry following an earlier ban on imports of Syrian oil, a key source of revenues for Assad’s government.
Syria has said it can sidestep sanctions by selling oil to Russia or China. But traders said most Syrian attempts to sell oil or related products in recent weeks have failed due to a lack of bids. “Exports are fully paralysed. No one wants to touch it. Banks are not financing the operations.
Russian companies listed in New York won’t take the risks,” said a trader in the Mediterranean who used to regularly deal with Syrian oil. EU sanctions allow imports of Syrian oil until November 15 under contracts signed before September 2 but traders said they had not seen any fresh shipments in the past weeks. “As far as Chinese and the Indians are concerned, they could of course try to buy some volumes.
But the economics don’t make any sense for them and volumes are too small to take the risks,” the Mediterranean trader added. Markets have reacted calmly to the loss of Syrian crude as the country produces just 385,000 barrels per day (bpd), or less than 0.5 per cent of global supply, and exports around 150,000 bpd , the loss of which seven month ago as civil war erupted rocked the oil markets.