SWIFT, or Society for Worldwide Interbank Financial Telecommunication, is a secure messaging system that facilitates fast cross-border payments and keeps international trade flowing smoothly.
Russian exports of all commodities, from oil to metals to grain, will be severely disrupted by new Western sanctions, traders and analysts say.
At least 10 oil and commodities traders, who spoke to Reuters on condition of anonymity, said flows of Russian raw materials to the West will be severely disrupted or interrupted for days or even weeks until that the exemptions be clarified.
Amrita Sen of consultancy Energy Aspects said the price of Brent is likely to rebound above $100 and likely return to highs of $105.
“But I wouldn’t rule out a quick move towards $110 a barrel,” she added.
Oil prices last surged above $100 a barrel when Russian forces invaded Ukraine on February 24, with Brent rising above $105 a barrel for the first time since mid-2014 . [O/R]
Prices fell back below $100 a barrel on Friday.
“While trying to exempt energy transactions, SWIFT can still cause significant disruptions in energy trade flows in the short term, at least until buyers switch to alternatives like Tlex or other systems,” Sen said, adding that trading other commodities will be much more difficult without exemptions.
These measures, which include restrictions on the international reserves of the Russian central bank, aim to prevent President Vladimir Putin from using the central bank’s $ 630 billion in foreign currency reserves to invade Ukraine and defend a falling ruble. free.
But the allies have not yet said which banks will be targeted, with analysts saying that if the list includes Sberbank, VTB and Gazprombank, the impact on the Russian economy and the ability to do business with Russia could be enormous.
A US official told reporters that if one of the banks excluded from SWIFT wants to make a payment with a bank outside of Russia, they will likely have to use a phone or fax.
But the official added that most banks around the world would likely cease all dealings with Russian banks removed from the network.
“The risk of unintended oil supply disruptions has increased following recent announcements,” said UBS analyst Giovanni Staunovo, referring to the SWIFT ban.
“Given low inventories and dwindling spare capacity, oil prices are likely to react significantly and open up,” he added.
On Sunday, Japan said it would join other Western allies in blocking some Russian banks’ access to the international payment system SWIFT, Prime Minister Fumio Kishida said.