New anti-Russian sanctions will bring oil to $100 per barrel

The EU provokes an increase in energy prices

At the next G7 summit, scheduled for May 19–21, the G7 members will announce new anti-Russian energy sanctions: private foreign tankers that help domestic suppliers sell fuel are going to be banned from entering European seaports. Moscow will lose part of the budget revenues, and the West risks provoking a rise in fuel prices due to the inevitable shortage of hydrocarbons.

Additional economic sanctions against Russia are designed to destroy the recently created transport chain, which allows domestic producers to bypass the previously imposed sanctions. As you know, the most serious blow to our extractive industry was the restrictions on shipping insurance and the “ceiling” of prices for raw materials, which the West officially approved in December last year. On the one hand, a price barrier of $60 per barrel was introduced at Urals, prohibiting the sale of Russian oil above this level. On the other hand, international insurance agents, who previously provided our companies with the necessary policies, were prohibited from entering into relevant agreements under the threat of selection of specialized licenses.

Domestic exporters quickly got their bearings in a difficult situation. The volumes of maritime transportation, although reduced, have not fallen to a minimum: using the example of Venezuela and Iran, also subject to energy sanctions and already groping for ways to overcome Western barriers, our suppliers began to transship hydrocarbons in neutral sea waters, mixing raw materials with Middle Eastern fuel. In addition, the ships of the “shadow tanker fleet” acted as assistants – tankers bought by supposedly Russian state-owned companies to ensure the delivery of fuel to Asian customers. Realizing that the requirements that have already been made public do not prevent Russians from exporting sanctioned barrels, the G7 decided to intimidate cargo carriers sailing with oil from our country under the flags of independent sovereign states, and is going to ban such operators from entering European ports.

Meanwhile, according to experts, by tightening sanctions pressure on Russia, European powers risk such “good” intentions to dig a hole for themselves. The other day, the head of OPEC, Haytham al-Ghais, warned that the current investments in the extractive sector are clearly not enough to provide the world economy with the necessary energy carriers, so now “the stability of the global energy system is at stake,” and without increasing the cost of exploration and development of new deposits, there will soon be a risk of a shortage of hydrocarbons.

“The introduction of new sanctions against Russia could lead to a deterioration in the situation in the energy sector around the world,” notes BitRiver analyst Vladislav Antonov. — The G7 seeks to use all available leverage to block our producers’ access to energy exports, without thinking about the consequences. The reduction in the supply of raw materials from Russia and a number of OPEC + countries, which was announced in mid-spring, may lead to an increase in stock quotes of “black gold”. The upward trend in prices will become especially noticeable against the background of underfunding of new projects and increased demand from consumers in China, whose rapid economic recovery after COVID-19 will turn the Celestial Empire into a major buyer of hydrocarbons for decades to come.”

In this regard, additional trade restrictions that the G7 is going to introduce as part of the 11th package of sanctions are forcing negative market events that contribute to forcing a shortage of energy resources and other industrial products on a planetary scale.

“In the current situation, it is becoming more and more obvious that the G7 countries in tightening the trade persecution of Russia are guided not by economic, but by geopolitical logic aimed at the financial capitulation of Russia,” says Artem Shakhurin, an expert at IVA Partners Investment Company. Then the West can move on to other rather radical reforms — establishing control not only over the Russian, but also over the global oil and gas industry in order to break the resistance of OPEC + and dictate its own rules of the game to the members of the producing organization.

In the meantime, a serious collapse of oil prices, apparently, does not threaten. The world’s main oil exporters said last year that they would do their best to defend the price level of $90 per barrel, said Vladimir Chernov, an analyst at Freedom Finance Global. The transition below this line, most likely, will be accompanied by an additional decline in the production of “black gold”, which can push Brent prices over $100. “Due to the tightening of sanctions against Russia, European consumers will have to fight for every barrel with Asian competitors,” the expert is sure. “This undermines the energy potential of the EU and will lead to increased unnatural growth in exchange prices for hydrocarbons.”

Published in the newspaper “Moskovsky Komsomolets” No. 29029 dated May 16, 2023

Newspaper headline:
The EU is digging a hole