The cost of moving Russian oil

Hey there, market people. Phil Rosen here.?

I spent much of yesterday parsing through pages of data on where Russian oil is heading and how much buyers are paying for barrels.?

The clearest takeaway is that the West's sanctions do in fact seem to be taking a toll as intended — Moscow's export revenues are down, but plenty of oil remains available as far as global supplies.?

Today we're unpacking two less obvious observations about Russian oil.?

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1. Yes, sanctions have crushed Moscow's war chest to start the year. The West's price caps in particular have struck the country's oil export revenue, which plunged 29% — $15.6 billion — in the first quarter, a new study from the Kyiv School of Economics found.

That said, researchers pointed out that most of the Western companies still facilitating Russian oil shipments don't actually abide by the $60-a-barrel price cap that the EU and G-7 imposed.

Ninety-five percent of the oil sold out of Russia's Pacific port of Kozmino, the KSE study showed, involved Western-owned or -insured ships, and essentially all transactions were made at rates above the price cap.

The data points to "potentially considerable price cap violations," the researchers said, noting that most of the buyers in question were from the UAE, Hong Kong, and Singapore.?

The takeaway here, then, is that the sanctions are working despite widespread infractions.

Now, the second under-the-radar detail comes from several spreadsheets I received from Argus Media, a commodities tracking and analytics firm.?

Ships carrying Russian oil, according to Argus, indeed make a premium for doing what they do, but that premium has shrunk over the last month.?

Freight rates for Russia's flagship Urals crude have declined across the board, even as supply remains high.

In effect, the "sanctions premium" isn't what it was a month ago.

The margins have narrowed by about $0.50 month-on-month leading up to last week, and demand for tankers has stagnated, Alex Younevitch, Argus' Head of Freight, told me via email.

"Rates are likely to remain under pressure throughout April and into May as chartering is muted and looming OPEC+ cuts keep nibbling at shipowners' confidence," he said.

The takeaway here seems to be, then, there's still a bonus to be made in the business of handling sanctioned oil, but it doesn't pay what it used to.

Are more sanctions warranted to keep cutting into Russia's export revenue? Let me know in the comments.

In other news:

2. Goldman Sachs broke down how to invest right now to profit this year. Specific sectors can still provide opportunities even as uncertainty and the banking turmoil weigh on economic growth. Find out how.

3. Mike Dever has a 40-year track record of outperforming markets. And he does so by rejecting conventional wisdom. He shared four ways investors can mimic his approach for the current landscape.

4. JPMorgan strategists warned that stocks are set up for a bearish outcome. Investors are piling into the top names in the market at rates last seen in the 2000 and 2008 bubbles, the firm said: "The risk of recession is far from priced in."

5. Microsoft mentioned artificial intelligence 50 times in its earnings call and Wall Street is thrilled. Shares of the tech giant soared Wednesday after a strong quarterly report, and a handful of banks including JPMorgan and Bank of America raised their price target for the company.

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