Oil Conflict – Russia’s Oil
Russia keeps suffering humiliating losses in the war against Ukraine, but it feels as if nothing is changing which shouldn’t be the case. Russia’s economy should be crumbling with how many sanctions the West has placed on them, but it’s unfortunate that a loophole has been found. Russia’s vast oil reserves have allowed them to continue selling to other countries in exchange for money to boost the economy and fund the war. This is furthered by the rise in oil prices and energy, allowing Russia to receive more money per barrel than usual as demand is still consistent.
The West has been trying to find ways to prevent this from occurring, and it’s clear OPEC had no intention of helping that effort. On Wednesday, the 14 member states along with Russian allies came to an agreement to slash oil output by 2 million barrels per day, which will help boost prices and increase Russia’s profits. This is the largest cut since April of 2020, and it marks another move by the group now known as OPEC+. Delegates acknowledged that they were helping Russia in a massive way with this decision, but the public statement was that it’s a “technical response to a flagging global economy.” The White House condemned the decision and released 10 million barrels of oil from their reserves which would alleviate the problem, though very little. This move by OPEC spells major problems for both the war and the economy. Russia’s cash cow will continue to grow, allowing them to fund further military efforts and keep the war ongoing as a peace agreement is nowhere close to being achieved. Russia’s oil leverage also allows them to play with Europe’s economy, which has been plagued by high energy prices that have been one of the major inflation creators.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
