shows that after experiencing a decline in July and August, the price downward trend in September has not been curbed. The average price in that month was US$68.3 per barrel, down 8.7% compared with the price in August and 5.8% compared with the price in September 2021. Ural crude oil prices have fallen significantly for three consecutive months, indicating that the effect of energy sanctions imposed by the United States and the West on Russia has become increasingly obvious.
(Russian oil field in operation)
From the perspective of the international environment, the crude oil in the market is still in short supply and the price remains at a relatively high level. However, OPEC representative recently announced that OPEC countries will continue to cut production, preparing to cut production by up to 2 million barrels per day. Swiss Bank predicts that OPEC's move will bring the international Brent crude oil price to US$110 per barrel by the end of this year, and the price of Brent crude oil is stable at US$80 to US$90 per barrel.
So why is the price of Ural crude oil so different from the normal international oil prices? There is no doubt that this has a lot to do with the sanctions led by the United States.
The influencing factor of international oil prices is a very long chain, and Western countries will more or less have an impact on the links in the chain. Factors such as oil resources, production and processing, transportation, settlement composition, and market constitute the entire oil settlement chain. Problems in any link will directly affect oil prices. When the Russian-Ukraine conflict broke out, the United States and the West directly kicked Russia out of the SWIFT system , which is to sanction Russia on the settlement system. Although Russia proposed countermeasures to bind oil and natural gas based on the urgent need for energy interdependence, Western sanctions have had an impact on Russian oil exports at this time, so since then, Ural crude oil has been forced to lower prices and sell at a discount.
(SWIFT settlement system)
Russia can completely control the oil production and processing links and is almost unaffected by the West. Since the beginning of his takeover in 2000, the government has regarded energy as a tool that can influence foreign policy, so the Russian oil company not only controls the production of most of its own oil fields, but also has a very strong processing capacity.
But the transportation process is different. First of all, oil transportation requires tankers with huge loads. Russia, which has been involved in global transactions for many years, has not had the sense of crisis to establish a tanker fleet, and it also does not have the super-large-scale funds controlled by international capital. Therefore, Russia's Ural crude oil exports have always relied on international maritime transportation companies. Secondly, due to the high cost of ocean-going oil tankers, a small price fluctuation is enough to make people lose everything. Therefore, the prerequisite for tankers to go overseas is to find a suitable company to buy insurance, and in the field of insurance, Western countries have stronger control capabilities. In recent years, one of the most important problems in the economic development of European and American countries is the hollowing out of the industry and the financialization of the economy. The strength of the Wall Street alone can cause "turning" changes in the international insurance industry. Once European and American countries impose sanctions on Russia, most companies dare not provide insurance for tankers transporting Ural crude oil, which undoubtedly greatly restricts Russian crude oil exports. At present, the West is using transportation issues to suppress Russia's crude oil prices and forcing Russian oil prices to continue to lower.
(giant tanker)
Let’s talk about the market again. Since the outbreak of the Russian-Ukrainian conflict, Russia's share in the oil market of Western countries has been shrinking, with key areas of oil exports shifting from Europe to Asia, and China and India have become the fastest-growing countries in importing Russian oil. But from the perspective of energy security, China and India cannot eat all of Russian oil, but will maintain the diversification of their own crude oil import sources. This has also caused problems in the market for Russian oil, which is already facing transportation difficulties, which is one of the reasons for the continuous decline of Russian oil prices.
In the long run, if this momentum cannot be effectively controlled, Russian oil prices may continue to fall, or even fall below the cost price of US$44 per barrel, which will mean that Russian oil exports begin to lose money.According to data in 2021, Russia's oil and natural gas exports accounted for 36.7% of the total national income that year, and most of the military expenditure in this conflict between Russia and Ukraine also came from oil income. If oil exports fall from the money-making range to the money-loss range, the blow to Russia may be greater than the previous blow of the Nord Stream natural gas pipeline.
plus under the huge pressure from the United States, the Nord Stream pipeline cannot be restored in a short period of time, and Russia and Europe lack key bargaining chips for improvement, and Russia will be more passive in the face of Western sanctions.
(Natural gas leak occurred after the Beixi pipeline was damaged)
So, fossil energy such as oil and natural gas is now "Xiao He is successful and Xiao He is defeated." The fluctuations in oil prices may affect the final outcome of the Russian-Ukrainian conflict. No matter how the situation develops in the end, we are wary of our country's energy security issues. When considering energy security, we not only need to promote the diversification of energy use and imports, but also need to master the entire energy chain. We do not need to control the proportion of energy in the world, but at least we must ensure that China's energy is not only affected by a certain country or region.
