Ukraine-Russia crisis is driving countries to explore new ways of pricing oil, Qatar says
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Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman bin Jassim al-Thani
Yasser El-Zayyat | AFP | Getty Images
Qatar’s foreign minister has said the conflict in Ukraine, and its geopolitical ramifications, is pushing some countries to explore new ways of pricing oil — not in the dollar.
Mohammed bin Abdulrahman Al-Thani posted the following comments Saturday a Wall Street Journal report that Saudi Arabia is in accelerated talks with China to accept yuan instead of dollars for oil that Beijing buys.
Al-Thani, speaking to Hadley Gamble in Doha Forum said that although he doesn’t anticipate such a system being introduced in the near future, he stressed the fact that certain countries are suffering from the negative economic impact of the Ukraine War.
“Honestly, take a look at the dynamic and what is happening around you right now. “I’m certain that there are many countries out there who are not happy with what has happened or the effects of the Ukrainian Russian crisis.
“And they’re going to look at and explore a paralel system.” [of pricing oil] … going to hedge, at least, for them economically. As we’re in a transition period, it will be more than a political one. It will also involve an economic transition.
Last week, Gal Luft, co-director of the Institute for the Analysis of Global Security, told CNBC the U.S.’ stinging economic penalties could push countries away from the dollar — the currency oil is typically priced in.
These sanctions are: effectively freezing Russia’s central bank reserves and disconnecting Russia from the interbank messaging system, SWIFT.
“On the one hand, you are sanctioning rightAnd left. You want other countries to purchase your Treasurys, and help you finance your debt. Luft explained that such a scenario is unsustainable.
Oil diversification
Qatar’s Al-Thani stated that Qatar is “stepping up”, and was in discussions with European nations about increasing gas supply.
“We are stepping up and helping some European partners who are starting to suffer from some gas shortages … with the limited amount that we have,” he said, stressing that the majority of its gas contracts are long-term and so can’t be changed.
It comes as European countries seek to diversify their energy supply away from Russia – particularly gas. According to International Energy Agency, 45% of EU’s gas imports came from Russia in the last year.
The U.S. stated Friday that it would provide minimum assistance. 15 billion cubic meters more of liquified natural gasThis year’s total to Europe is expected to rise.
Al-Thani stated, however that there is no substitute for one of the energy suppliers.
He stated, “I think diversifying supply will be the best approach.” This is the only path forward. Right now we are talking to a number of European countries about new long-term agreements. This discussion is ongoing.”
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