A controversial one.

To Be Or:

Two pieces of news, one good and one controversial, both from Reuters, both about oil. The good one: ▪️As a result of Ukrainian strikes, Russia in April cut oil production by 300,000-400,000 bpd compared with the first months of the year and by 500,000-600,000 bpd compared with the end of 2025. ▪️This…

A controversial one.

Reuters: Russia will stop the transit of Kazakh oil to Germany via the northern branch of Druzhba from May 1 because of worsening Russian-German relations.

Why controversial, since this looks as if Russia is shooting itself in the foot? Sort of, yes, but alongside the positives, there is at least one downside.

Positives:

➕Russia really will suffer from the shutdown itself: at the very least, it will no longer receive rent payments for transit.

➕There are suspicions that the Kazakh oil supplied to Germany is not always 100% such. Kazakh sources once wrote that industry experts were surprised by the "Kazakh" origin of this oil, and hinted that at the Samara hub it may be mixed with Russian oil. In short, it is not entirely clear what percentage there is Kazakh oil, and what percentage is Russian. But apparently, if Kazakh oil does not reach Germany, then some percentage of Russian oil along with it will not either.

Downsides:

➖The Kazakh oil supplied to Germany via Druzhba accounted for 17% of the processing at Germany's largest refinery, PCK Raffinerie, in the city of Schwedt. And given the Middle East crisis, losing 17% of processing in one go hurts. This could trigger a fuel crisis in the Berlin and Brandenburg regions, where 90% of cars are supplied with fuel from PCK Raffinerie.

True, Poland immediately volunteered to help Germany: Polish operator PERN said it was ready to supply non-Russian oil to PCK Raffinerie from its port of Gdansk, but for now it is unclear what volumes Poland can actually compensate for.

In short, it is still unclear who will suffer more: Russia from losing transit rent, or Germany, which will be short 17% of nominally Kazakh oil supplied to its largest refinery.

And Kazakhstan's reaction is interesting too, of course. So we will keep watching.

Background: the northern branch of Druzhba runs to Germany through Belarus and Poland (see the map above). I marked the approximate route with the red arrow.