2023 will bring the true test of the West’s oil-war tactics

The west has been trying to cut Russia’s oil-export revenues without causing global prices to spike since February. Both aims are seemingly being achieved at present. Russia exports as much oil as before its invasion of Ukraine, but Urals crude, the main grade it pumps, trades at a 37% discount to Brent, the global benchmark, meaning Moscow gets a poor deal. Brent, meanwhile, has fallen to an annual low of around $80 a barrel (see chart), meaning consumers face less of an energy crunch.

The Economist

Little of this is down to Western efforts. On December 14th and 15th central banks in America, Britain and the eu announced interest-rate rises, and signalled more would come, sucking demand from the economy. China, reeling from soaring covid-19 cases, posted its worst factory and retail data in six months. Members of the Organisation for Petroleum Exporting Countries (opec) and its allies are producing nearly as much as before a cut to their collective target was announced in October, since most were already pumping below their quotas.

The West’s boycott of Urals, which accounts for 10-15% of the world’s crude supply, is probably bringing its price down a bit, as the grade undercuts others. An exemption to Europe’s ban on insurance for tankers carrying Russian oil, which applies to buyers that agree to pay a maximum of $60 per barrel, may be helping to prevent a supply shock. But neither measure is having a huge impact. If economic or market conditions change, prices…

#bring #true #test #Wests #oilwar #tactics

Leave a Reply

Your email address will not be published. Required fields are marked *