Global Oil Market Facing Uncertainty Amid Russia Sanctions, Experts Say
The global oil market is at a “moment of incredible risk and uncertainty” due to Western sanctions on Russia, and there isn’t a clear short-term solution, said Randy Bell, an expert at the Atlantic Council. Bell, speaking during a March 11 event hosted by the think tank, said it may be too soon to determine the lasting impacts of trade restrictions on oil supplies, especially as the U.S. and other countries continue to impose sanctions against Russia.
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“Will Iranian oil come back onto the market? Will Europe stop importing Russian oil as they suggested earlier in the week?” Bell said. “There are so many moving parts that it's just hard to know.”
U.S. officials, who are searching for alternative oil sources after announcing an import ban on Russian oil last week, recently met with Venezuela in Caracas to consider lifting some oil sanctions against the country (see 2203070046). Although lifting sanctions on Venezuela is a possibility, Bell doesn’t view it as a realistic, short-term solution.
“I don't see that as bringing any certainty to the market in the short term,” he said, but added that it may “improve sentiment” and “perhaps is a good idea over the medium term.” But over the short term, “it would have a marginal impact,” Bell said.
Julia Friedlander, an Atlantic Council expert and a former Treasury Department official, said a combination of U.S. export controls and trade restrictions have severely damaged the Russian oil market. She said oil traders “can't move Russian oil right now. They can't even sell it at a discount.”
The trade restrictions have also convinced many shipping firms to leave Russia, so even if Moscow were to exit Ukraine immediately and U.S. oil sanctions were lifted, Friedlander said, “we would not be able to return to the scenario that we had several weeks ago.”
“In addition to this physical breakdown of the market and delivery, you also have put in a set of restrictions that cannot be rolled back,” she said. “We could be seeing a Russia that essentially functions as a financial and economic pariah for the coming decade.”