OPEC Secretary General Mohammed Barkindo decided to cool the ardor of European officials by warning them about the consequences of imposing sanctions on Russian oil
According to him, such measures could lead to one of the most serious shocks to the supply of black gold in history, it will be impossible to make up for the loss of these volumes. The OPEC Secretary General said that he “expects a loss of more than 7 million barrels per day of Russian oil and fuel exports due to current and future sanctions.”
In fact, the head of the oil cartel even slightly downplayed the losses. According to the International Energy Agency (IEA), it is now Russia that exports about 4 million barrels of oil per day (and more than 3 million barrels of petroleum products). And last year, as, indeed, in most cases, exports reached 5 million barrels. According to the same IEA, European consumption is 13 million barrels, a quarter of which is in Russia. How the Old World intends to fill this volume is not yet entirely clear.
As far back as last year, Russian businessmen were talking about the fact that, having survived the crisis, when oil prices reached negative values, having survived the pandemic, the global oil industry began to experience serious underinvestment. Just to maintain the current level of production, about $17 trillion is needed until 2040. According to the IEA, in January, the total global production amounted to 98.7 million barrels per day. And the demand forecast for 2022, according to the American EIA, will be over 100 million barrels. That already speaks of a possible deficit.
Anticipating a problem with the supply in the event of sanctions, in search of additional volumes of oil, the US administration has already run through the largest producers of black gold, but so far has not been able to find saviors of the situation among them.
Riyadh was in no hurry to meet Washington’s requests to increase production, citing obligations under the OPEC+ deal. Although in the past, the Saudi rulers have increased or decreased oil production several times to please their allies in the US. Now, the choice to maintain high prices shows that the Persian Gulf no longer needs approval from Washington and is making new alliances with like-minded people.
Everyone expected that Iranian oil would soon enter the market, the sanctions against which could be lifted if Vienna could agree with Tehran on the nuclear program. However, a few days ago, Iranian President Ebrahim Raisi said that the republic would not step back from exercising its right to develop a peaceful nuclear program.
But even if we assume that the sanctions would be lifted, Iran would not be able to cover the disappeared Russian supplies with its volumes. The republic is potentially able to increase crude oil production from the current 2.5 million barrels per day to about 3.8 million, that is, only 1.3 million barrels per day can be exported additionally.
Venezuela, which is also currently under US sanctions, is also able to increase production – up to 1.2 million barrels from the current 800 thousand. But this takes time and money. And the volumes are far from the losses that the market may experience in the event of an embargo on Russian oil.
Probably, US President Joe Biden, who has already imposed a ban on the supply of Russian oil to the States and is trying to explain to the Americans that the Russian leader is to blame for rising fuel prices, hopes to save Europe by releasing strategic reserves.
In early April, it became known that the IEA member countries, together with the United States, would release 240 million barrels of strategic reserves to the market within six months, but this is equivalent to only 1.3 million barrels per day. But even these volumes were questioned by experts, since capacities may be limited to 500,000 barrels per day. In addition, you need to understand that, having released such a volume of oil from the reserves, they will need to be replenished. And replenish not at crisis low prices, but at prices that will be dictated by the market in conditions of acute shortage. As has been noted more than once, in the event of an embargo, the cost of black gold could rise to $150 per barrel.
In general, arithmetic does not beat. And even if, by some miracle, Venezuela, Iran, and the IEA will bring their maximum capabilities to the market today or tomorrow. All figures are absolutely transparent, and Western politicians need only sit down together and calculate what their desire to drive Russian oil workers into a corner can lead to. First of all, this reckless move will bring the Old World into recession and put the Europeans on the street. Do not dig another hole, as they say.
Meanwhile, although the vast majority of European companies have already announced sanctions against black gold from the Russian Federation, Russian oil exports are showing no signs of decreasing today. Deliveries in the first seven days of April were 4 million barrels per day, the highest level this year. The only thing affects the volume of exports – longer distances over which goods go.
At the same time, announcements about the abandonment of Russian oil in a number of cases turned out to be nothing more than declarations that have nothing to do with real actions. The other day it became known that the Dutch Shell continues to buy black gold from the Russian Federation, blending it with raw materials from third countries. It can be assumed that this is not the first and not the last company to do this.
Irina Kezik, Izvestia newspaper
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