The US designs with its partners how to ban Russian oil in the West

US designs with its partners how to ban Russian oil

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The price of Brent oil shot up to 130 dollars per barrel on Monday after learning that the United States (USA) is managing with the European Union (EU) the prohibition of imports of Russian oil not only on its soil, but on a larger scale. that would implicate NATO partners. That is, the bulk of the West.

US Secretary of State, Anthony Blinken said his country is in “very active” discussions with its European partners about the possibility of banning Russian oil imports.

The news pushed the price of Brent oil above 130 dollars a barrel, a maximum of 2008, triggering fears of an inflationary shock that could increase the risk of stagflation.

Until now, the United States had resisted imposing these restrictions precisely because of concerns about the impact of rising prices on inflation. But the escalation of violence in Ukraine turned events upside down.  

The move would put additional pressure on the Russian economy, which is already severely weakened by sanctions and corporate boycotts by large multinationals.

Economic setback for Russia with oil

Russia’s highest income comes from its oil and gas exports, an amount that the managing partner of Nextep Finance, Víctor Alvargonzález, estimated at 240,000 million dollars, as confirmed by this expert in the podcast ‘The closure’.

In this way, the escalation of crude oil with the war is benefiting the Putin regime, but if oil production shoots up outside the Russian circuit, the country would be affected and “it would hurt, because we would not be raising the salary of Putin,” Alvargonzález said.

After the sharp rise in oil, some investment banks put figures on what is to come. Thus, JP Morgan economists predicted crude oil prices of $185 if the veto on Russian oil finally goes ahead.

The risk of stagflation

The pressure on the main source of income is maximum. In fact, Blinken prefers coordinated action with European partners, but did not rule out unilateral action by the United States in case consensus is not reached.

“NATO members currently buy more than half of the 7.5 million barrels a day of oil and refined products that Russia exports,” said Victor Shum, vice president of IHS Markit.

If the idea is to suffocate the Russian economy by depriving the Putin regime of this income, the counterpart for Western economies is the sharp rise in prices and the threat of stagflation, with the implications that this has for the global economy and supply chains. supplies.

“The multiple dimensions of this war will lead to unrest and unexpected results,” Shum recalled. recalled.

In fact, “one of the greatest fears of investors at the moment is being able to assess the true impact that the imposed sanctions and the decisions of many of them to leave the Russian market will have on companies, especially European ones.”, the analysts of Link Securities recalled.

Efforts to increase oil supply

In the midst of this upward escalation of crude oil, efforts are being made to increase world supply.

Two top US officials met with members of the government of Venezuelan President Nicolás Maduro in Caracas to discuss the world’s oil supply and the country’s ties to Russia.

Meanwhile, Iran has moved toward a deal with world powers over its nuclear program, which could pave the way for sanctions on Tehran’s oil to be lifted by the third quarter.

The problem, as Jeffrey Halley, a market analyst at Oanda, explains, is that “Iranian oil cannot replace Russian oil.” Even with greater than 100 percent OPEC+ compliance, there is not much capacity to pump more crude immediately, this expert said.