Strategic Council Online - Interview: A faculty member of the Institute of Strategic Studies says there has been a change in the global energy transmission lines after the Ukraine war began. He noted: With the continued shift in the oil trade routes of Russia, India and China have become strategic business partners for Moscow. This development has taken place in the shadow of the decline of the US influence among its key allies in the Middle East.
Referring to the unprecedented increase in the purchase of Russian crude oil by the UAE and Saudi Arabia, Mehdi Shapouri, in an interview with the website of the Strategic Council on Foreign Relations, said: Restrictions have been imposed by the West on the export of Russian oil, but the exports have not been banned, and no complete sanctions have been imposed. For example, the oil Russia exports by sea should not be bought above 60 dollars; in this case, the buyer company will be sanctioned. Western insurance companies cannot cooperate in this case either.
Saying that the restrictions and bans imposed on the sale of Russian oil by the West are not the same as the restrictions imposed on Iranian oil, he added: In a situation where the Russians have lost the European market as their most important market, they sell their gas and oil at huge discounts. Under such conditions, China’s imports from Russia have increased sharply. Until two years ago, India had minimal imports from Russia due to the inefficiency of transportation, but now due to the increase in the price of oil during this period and the discount that Russia gives on its oil, it is very profitable for it to import Russian oil and its oil purchase from Russia has increased several times.
The expert on international affairs continued: Under the impact of the restrictions created for Russia, every country uses it in a way to advance its interests; in this regard, we are witnessing the rich profits of Saudi Arabia, the UAE, and Turkey; as the export of Turkish goods to Russia has also doubled during this period. Russians have many opportunities for trade with the UAE; on the other hand, Russian oil exports to the UAE in 2022 reached a record of 60 million barrels, a threefold increase compared to the previous year.
Stating that the UAE has dramatically used the sanctions on Iran and Russia in the past years, Shapouri added that Saudi Arabia also benefited greatly from buying cheap Russian oil, which was very economical. Western countries do not cause problems as long as other countries respect the restrictions; moreover, their private companies have no problem trading Russian oil and gas by observing the imposed restrictions.
According to the expert on international affairs, the West and especially Europe have imposed additional sanctions against Russia. Still, if a country complies with the ceiling established by the Group of Seven, it will not be sanctioned. Therefore, it is very profitable for a country like Saudi Arabia to buy cheap Russian oil and sell it at a high price. Russia now exports about 100,000 barrels of fuel per day to Saudi Arabia, while before the start of the war, this number was almost zero.
The Strategic Studies Research Institute faculty member stated that there had been a change in the global energy transmission lines after the Ukraine war and emphasized: A fundamental transformation has occurred in energy distribution and transmission worldwide. Russia is finding new markets and is active in Iran’s gray market. Now the major oil producers of the Middle East have become buyers of Russian oil.
He said: The West did not achieve all its targets regarding putting pressure on Russia, but it gained some of its objectives. They sought to cut Russian revenues, which they did. Now Russia sells its oil below the world price, and in recent months, Russia’s oil income has decreased by about 50 percent compared to the last year, but in any case, they have also suffered.
Shapouri added that Europe could get its oil and gas in much cheaper and more manageable conditions. It cannot be denied that they have also suffered the loss of sanctions.
The expert on international affairs regarding the consequences of changing the direction of global energy lines noted: At the global level, countries, including the United States, gained benefits from this event. That country partially filled Russia’s absence in Europe, and the country’s energy exports to Europe increased significantly.
He said that Russia, having lost the Western market, tried to dominate the Eastern market as much as possible. He referred to China as another country benefiting from the change in global energy lines. Beijing now not only buys Russian oil and gas with favorable conditions and a considerable discount, but they also get more discounts for purchasing oil from other countries because of the discount conditions applied by Russia. Compared to European economies, Chinese companies now have more advantages. India also has such requirements. India is the third country that gained much profit; Russia has now replaced Iraq and Saudi Arabia for them.
Shapouri mentioned that Middle East countries that could export oil also gained much income due to the increase in oil prices to the extent that Saudi Arabia had one of the highest economic growth in the world last year.
The faculty member of the Research Institute of Strategic Studies emphasized: With the continuation of the change in Russia’s oil trade routes, India and China are known as strategic business partners for Russia. A change that has taken place in the shadow of the reduction of the US influence among its key allies in the Middle East.
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