HomeMediaLatest NewsThe hybrid embargo is already with Russia and for a long time: to whom is oil to be sold now?

The hybrid embargo is already with Russia and for a long time: to whom is oil to be sold now?

12 May 2022

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance, commented to the Moskovskaya Gazeta internet portal, what Russia expects in connection with the EU's refusal of Russian oil.

The Secretary of State at the French Foreign Ministry Clement Bon said that the European Union's refusal of Russian oil is a matter of a few days. At the same time, he acknowledged the pain of the embargo for such European countries as Hungary, the Czech Republic, Slovakia and Bulgaria. What exactly and in what perspective does Russia expect in connection with the statement of the French Secretary of State?

At the moment, it is realistic to talk about India as a promising buyer of Russian oil, Marcel Salikhov said.

“For China, Russia is already the largest supplier of oil,” Marcel Salikhov noted. - Practically "number one", sometimes this place is occupied by Saudi Arabia. China does not really want to increase oil supplies from Russia. Independent Chinese companies - yes, but not state-owned, they do not want to fall under secondary sanctions from the US and the EU. For India, Russia is not the main supplier of oil. And now Delhi has begun to increase oil supplies from Russia, it is now beneficial for her from a logistical point of view.”

What kind of losses await the Russian economy? It will be possible to talk about this specifically in 5 or more years, Marcel Salikhov believes.

“Oil and gas revenues of the budget will not suffer this year, they will be higher than in the past,” the expert predicts. — The average annual price of Urals oil last year was around $65 per barrel. Now Urals is trading at a big discount, about $35 per barrel. But back in April, Urals was at $70 per barrel. “Oil and gas revenues will be reset to zero, and there will be nothing to pay the salaries of teachers and doctors,” such a scenario will not happen this or next year. The main risks for the Russian economy are on the horizon of 5 years. The embargo is a long-term story. Most likely, restrictions on Russian oil exports will not be lifted. Oil and gas exports will gradually decline, which is 40% of federal budget revenues. It will require spending on state support, import substitution, and this balance will be difficult to support.”

That is, Russia is waiting for a gradual decline in living standards on the horizon of 5 years or more?

“Yes, something like that,” the president of the Institute for Energy and Finance agreed.

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