The Russian oil industry surprised not only the West

Alexey Gromov commented on the current, prospective situation with the production and export of Russian oil to the Vzglyad publication.

“Now the share of Russian oil supplies to Europe in mixed form is no more than 10%. Obviously, history is not critical for us. Besides, these are just recommendations. But while there is a consensus in the Western world that the market is not in a very stable situation with the supply of oil, therefore, it is unreasonable to further tighten restrictions before the autumn-winter heating season. On the contrary, we are now seeing a reverse trend. For example, the UK decided to refrain from a ban on insuring ships carrying Russian oil. The talks of the G7 countries about setting a price ceiling for Russian oil also remain at the level of talks,” Alexey Gromov, Energy Director at the Institute for Energy and Finance says.

“Everything will depend on how difficult the situation will be in the global market in terms of supply. So far, we see that despite all the efforts of Biden and other Western leaders, the supply on the market is not increasing much. OPEC's latest decision (to increase production by just 100,000 barrels per day since September) speaks of very modest opportunities for members to increase production. This decision is based on the banal problem of lack of free mining capacity. To boost oil production, investments and time are needed,” Gromov explains.

Secondly, the expectations of the lifting of sanctions against Iran did not come true, the situation here again reached a dead end. Thirdly, there is no increase in the share of Venezuelan oil in the market. “Finally, and most importantly, American shale producers also cannot, for a combination of reasons, increase oil production, as required by the market,” the source notes.

“Further sanctions against Russia may further rock the global oil market, the price of oil and related energy sources, and then everything. Because oil prices underlie the entire world economy, it is its blood,” Gromov says. Therefore, the EU is unlikely to go for tougher sanctions in the next two to three months at least.