Asia will become the ‘default market’ for Russian oil, Dan Yergin says
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CNBC’s Vice Chairman Dan Yergin of IHS Markit said that Asia would be the primary market for Russian oil, as Russia tries to find buyers.
The rising oil prices that have hit a high point since Russia invaded Ukraine at the end of February have put immense pressure on oil importers Asia such as India, China, and other Asian countries. Moscow is also attractive to both Beijing and New Delhi.
Yergin said Monday that Asia was the default destination for Russian oil barrels, which normally would have gone to Europe.
Moscow was punished economically by the West. The U.S. banned Russian crude. U.K. planning to do the sameSimilar measures are being considered by the European Union and Canada.
Yergin stated, “There’s a lot to self sanction that’s going on. It’s just people not picking oil up, banks not giving letters of credit and shippers not turning up, as well as people living in ports that are not receiving Russian oil.”
Russia is an energy powerhouse, which I would say five weeks ago. Russia will continue to play a significant role. However, it will be of lower energy power than before.
Russia now has a lot of oil, which makes it more difficult to sell. Analysts believe that this will continue to increase. Russia is part of the OPEC+ Alliance and is the largest oil exporter to the global market. It also exports the most crude oil, second only to Saudi Arabia. according to the International Energy Agency.
“I would have stated five weeks ago Russia was an energy superpower. But it will still play an important role. But, it’s going be a decreased energy power compared with where it was before,” Yergin explained.
The IEA stated earlier this month that Russian crude oil is currently being sold at unprecedented discounts. A handful of commodities trading firms offered discount prices of $30 per barrel and $25 per barrel for the Urals blend. according to analysts.
However, other countries’ exports of energy have seen their prices rise. spiked to levels not seen in over a decade. Prices for oil are now around 80% higher than last year, and they have fluctuated since the beginning of war.
India has a strong desire to purchase Russian oil
Traditionally, India gets its crude from Iraq, Saudi, Arabia, the United Arab Emirates and Nigeria – but they are all dictating higher prices right now as oil prices soar.
CNBC was told by industry experts that there’s been a significant” rise in Russian oil deliveries bound for India since early March after the Russia-Ukraine war began — and New Delhi looks set to buy even more cheap oil from Moscow.
According to him, India, which imports around 85%, is really a shock for India’s economy when oil prices increase.
“India’s talking to Russia about buying oil at a considerable discount … but it’s a complicated logistical system that moves 100 million barrels a day of oil around the world and to rejigger that, it’s not going to go smoothly,” said Yergin.
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