Oil and gas prices hit records: Is Russia profiting from this?
Gasoline prices in the US and Europe skyrocketed.
A photo: REUTERS
Oil price close to the maximum value. Back in 2008, a barrel of “black gold” was sold at almost $150. On Monday, March 7, the price on the exchange reached $130. For the Russian state budget, this state of affairs is a solid plus. Our treasury is reduced without a deficit at $60 per barrel. The current prices are twice as high. Moreover, the dollar exchange rate jumped sharply. It smelled of super profits. But this view is misleading…
WHY DON’T BUY OUR OIL
The main profit is now received by other manufacturers – the United States and the countries of the Middle East. Demand for their oil has skyrocketed. More than half of our exports are consumption. The main consumers are trying to give preference to “toxic” Russian oil. It happened not only collectively.
– Export intermediaries – say banks, insurers and tanker companies, as well as an attack by oil companies – when they imposed a ban on the purchase of Russian oil, – an analyst at the Oil Price Information Service Tom Kloza (quoted by Interfax).
So far, there are no data on specific volumes. According to preliminary data, if Russia produced abroad 7.5 million barrels per day, then in the lower week they fell by a quarter. To sell Russian oil, buyers have to give discounts – they reach $20-25 per barrel. That is, our oil is actually sold in natural volumes and for $90-100 instead of the market $120-130 per barrel.
At the same time, some companies even publicly apologized for buying Russian oil. Shell said it was forced to do this, otherwise its oil refining facilities would have been left without work.
In all US states, the price of gasoline has risen sharply.
A photo: REUTERS
GAS PRICES IN SPACE
Even more deplorable is the situation with the presence of gas. If there is a lot of oil trading around the world, then there are not so many participants involved in gas. The market price for a thousand cubic meters has been skyrocketing for the last year. And now it has reached cosmic values - $ 3800. For comparison, a few years ago, the average prices were $200-$300, and in peak months they reached $400-500.
Russia is the main partner here Europe. Our pipelines pump nearly 200 billion cubic meters of gas into the Old World every year. In many EU countries, 50% depends on our “blue fuel”. And there is nothing to replace us. Already several flying devices use gas. The process is going on, but not so fast. Indeed, in order to receive cargo from America, it is necessary to build a terminal for receiving liquefied gas. Yes, not alone.
– The federal government has been working for several months with its members in the European Union and for its pursuit of the development of alternative energy in Russia. But it doesn’t happen overnight. Therefore, it was conscious on our part to continue the activities of enterprises in the field of energy supply to Russia, the German Chancellor said the other day. Olaf Scholz.
By the way, most of our stocks in Europe are under fixed price contracts. But some customers buy gas at exchange prices. It was their conscious decision. They allow you to save money, hoping that the price will be lower on the exchange due to higher competition. Now they act an order of magnitude more or suspend activities (as manufacturers did).
Europe is still heavily dependent on Russian gas.
A photo: REUTERS
SMELL OF CRISIS – AS IN THE 70s
The United States and the time of application is still the most stringent decision against Russia – on the export of oil and other hydrocarbons. Actually, it is on these rumors that the cost of “black gold” and gas is growing. True, if America can go for it – our oil will take only 3% of US imports in a limited amount, and there is no gas at all – then it will be more difficult for Europeans. Their dependence is much stronger – about 30%.
Foreign buyers are urgently looking for an alternative. But it’s not that easy. There is a shortage in the market. The situation in Libya also added fuel to the fire. Two deposits emerged from the base there. Exports from the country decreased by 300,000 barrels per day.
– It could be a big logistical failure and people will fight for barrels. It’s a supply crisis and a payments crisis. The level of failures can be at the level of the 70s, – believes Daniel Ergin, vice chairman of IHS Markit, author of Mining. A World History of the Oil Trade” (cited by CNBC).
Recall that in the 70th year of the last century there was a similar situation. Then the Arab countries imposed an embargo on the supply of oil to countries that supported Israel in the war with Syria and Egypt. Then it was implemented to a sharp increase in income – and to the economic crisis in the US and Europe.
The United States urgently establish registration with Iran. This country has been under US sanctions for many years. In the end, it sells its volume of oil in limited quantities. And if the offer is withdrawn, Tehran can add about 1-1.5 million barrels per day to world trade. These volumes do not replace Russian oil, but they can calm the market a little. This is what the Europeans are hoping for.
On November 7, 1973, due to the fuel crisis, drivers were expected to refrain from panic buying gasoline.
A photo: GLOBAL VIEW ON THE PRESS
MAYBE IT’S TIME TO AGREE?
In general, share both sides of the conflict. Most individually Russia and applications. Additional profits are calculated by the USA, the countries of the Middle East and China, prudently sitting on the sidelines.
– As experience shows, the already imposed sanctions are extremely difficult to change. But until a settlement on Ukraine is reached, one cannot even talk about falling into the sanctions regime. The conclusion refers to the significant damage and the countries that introduced them. Therefore, there is hope that with a de-escalation of minor severity over time, they will at least be weakened, – says Olga Belenkaya, Head of the Department of Macroeconomic Analysis of FG “Finam”.
One of the main problems for applications is the sharp increase in position. She’s spinning out of control. This is a consequence of the pandemic. And the rise in prices of commodities pushes prices up even more.
– In the strict sense, the abolition or restriction is possible, since they are unfavorable for everyone. At the same time, the role of Russia is great, incomparable with other sanctioned countries. I think for the best, but …, – states Valery MironovDeputy Director of the Development Center Institute of the Higher School of Economics.
When the economy is so dependent on geopolitics and even psychology, it is extremely difficult to make predictions based on common sense.
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