Trump has changed Russia's role in the oil market for long time

Alexey Gromov, Principal Director on Energy studies at the Institute for Energy and Finance, gave a detailed interview to the Internet portal URA.RU on the long-term impact of the conflict in the Middle East on Russian oil exports.

The energy crisis due to the situation in the Middle East is not a deliberate redistribution of the market, but the consequences of Trump's impulsive decisions, Alexey Gromov believes.

The military operation that the United States and Israel launched against Iran has resulted in such large-scale changes in the global oil market that Donald Trump probably did not even imagine. For Russia, the restructuring of export flows means strengthening its position not only for the period of the acute phase of the conflict, but also for the longer term, the expert notes. The number of buyers and the volume of supplies will grow, and Washington's new threats of sanctions may not work.

— First, the US operation in Venezuela, then against Iran — in two oil regions. What kind of game is the United States playing in this market and what are they ultimately trying to achieve?

— I think the main interests of the United States in these two regions are political and unrelated. The general feeling is that Washington is trying to solve long-standing problems of its foreign policy during the presidency of Donald Trump. In the western hemisphere, this is the elimination of regimes that do not suit the White House in their political views. This applies to Venezuela, and in the future to Cuba. And in the Middle East, Iran is a direct existential threat to Israel, whose lobby strongly influences American foreign policy.

I would not say that the US oil market has started some kind of complex multi-way combination that will allow them to gain control of this market.

One gets the impression that Washington's foreign policy is impulsive, which fully corresponds to the personality of Trump, who tends to make quick decisions and not fully calculate their consequences.

— The United States itself, as an oil supplier, on the one hand, benefits from high prices and reduced competition. On the other hand, fuel prices are rising in the country. After all, is such a price situation more of a plus or minus for Washington?

— The effect on the American economy is multidirectional. Yes, the United States has returned to the global oil and gas market over the past decade as one of the largest exporters of both. And the rise in energy prices, which is observed due to the conflict with Iran and the closure of the Strait of Hormuz, has led to a sharp increase in the income of American oil and gas companies. And this sector of the country's economy is definitely in the black.

On the other hand, the general population of the United States is unhappy with rising prices at gas stations. The specifics of pricing in the country's fuel market are such that more than 50% of the retail price of a liter of gasoline is the cost of raw materials. And the growth of oil prices, of course, pushes gasoline prices up.

Therefore, it is difficult for Trump to balance the situation, because the oil and gas sector is only a small part of the country's economy, and the vast majority of the population is experiencing increasing pressure from high gas station prices.

— What changes in the structure of global oil supplies have already been caused by the events of this year? Which of the exporters gained and lost which markets?

— The blocking of the Strait of Hormuz has led to a global restructuring of oil flows, surpassing even the consequences of December 2022, when Europe imposed an embargo on offshore oil supplies from the Russian Federation, and Russian companies had to refocus on Asian markets.

Today, due to the closure of the strait, the main oil consumers in Asia are looking for alternatives to Middle Eastern supplies. Therefore, the demand for Russian raw materials has increased, which had previously been subjected to sanctions pressure.

Now they have eased this pressure, and a queue of potential buyers is forming for Russian oil.