The fear of the embargo against Russia alone adds up to 200. These are the dollars a barrel at which the option contracts for deliveries in May and expiring on March 28 were quoted after the devastating hypothesis of a Russian crude oil embargo made yesterday by US Secretary of State Antony blinken.
This morning Brent reached 124 dollars a barrel, with a maximum reached instead for the WTI at 140 dollars, a level that recalls the highs seen in 2008 in the midst of the financial crises.
"A shortage of oil from Russia is not conceivable, it would be a cataclysm," he says bluntly David Tabarelli president of Nomisma Energia at Fisrtonline. “There are no other paths for the West to follow as an alternative to the Russian supply, other than to stop consuming and rationing”. Some analysts compare this crisis to that of the XNUMXs.
Niche Europe: for Germany and Italy in particular, such a measure would turn into a boomerang that would hit their respective industrial productions.
What a Russian crude oil embargo would mean for the West
The hypothesis of an embargo would therefore put Russia in check, already burdened by various sanctions, but also for the West it would be a very heavy situation.
THERussian economy he is spiraling very rapidly into an unprecedented depressive spiral. In a few days, the Russian financial system has crumbled: a large part of the banking system cannot operate abroad, the Moscow stock exchange is closed indefinitely, a large part of Western funds have liquidated their exposures to securities, shares and bond, Russian.
But Russia exports 7,8 million barrels per day and an Australian study estimates that the specter of the embargo is collapsing its export sales by 5 million barrels a day, something like 5% of global supply
“The prospect alone is keeping the market away from Russia, with tankers idling around its shores without loading barrels,” says an oil market dealer.
“The situation of oil is very different from that of gas. For the latter it is above all a supply problem, but it is not for crude oil” says Roberto Bianchini, partner of Ref. “The tensions on the price of crude oil therefore I attribute more to geopolitical tensions in general and I expect a lot of volatility. Let's take into account that the US can provide a good supply of crude oil, even if it is more expensive. After all, Russian oil is very "heavy" in the sense that it needs a long refining process before being put on the market."
What alternative to Russian oil?
In this situation all eyes go to OPEC+, the 23-nation coalition led by Saudi Arabia, in hopes of an increase in crude oil production.
However last March 2 - with the war already underway - on the occasion of its monthly meeting, OPEC agreed to stick to the plans, with a small increase in production in April, of 400.000 barrels per day, continuing the gradual restoration of production interrupted during the pandemic and defying calls for a crude hike. The agreement on this level of production was reached last summer and they will continue at this rate every month until next August.
Russia is the second largest member of the OPEC+ alliance.
On the other hand, there is also the problem that some of the OPEC members -such as Nigeria and Libya- are unable to fully provide for various capacity limits. Also Abdul Aziz Bin Salman, Saudi Arabia's energy minister acknowledged this, saying the world's oil-producing nations may not be able to provide much-needed supply, again referencing the recovery after the pandemic and blaming it on years of underinvestment in oil and gas. oil exploration.
The only two weight producers that could significantly increase output, and relatively quickly, are theSaudi Arabia and United Arab Emirates. Any contribution from Iran e Venezuela it would be minimal
Another front to observe is that nuclear with Iran: the agreement between the USA and Iran appears to be stalled, while its eventual achievement would put an end to the American embargo against Tehran.
The European gas market is also under pressure, where the price has risen to 216 euros per megawatt-hour, setting a new all-time high and more than tripling from this year's opening levels.
The specter of a new economic recession
Unfortunately, there is an element that could calm this crisis - which many analysts compare to that of the 70s - and that is the decrease in demand and a return to recession for the European economies. “Crude prices may go up, but if – due to a ferocious recession that could ensue – businesses and households reduce demand, prices could also fall again. But it is a remedy that we would not have wanted to see,” says another analyst.
