Slick Business – Russia Profits from Oil Prices 🛢

Slick Business – Russia Profits from Oil Prices

As the Russia-Ukraine war is still underway, the topic of the energy sector has been on everyone’s minds as the Western world continues to battle with the vast amounts of oil and natural gas in Russia. Russia has been profiting off the rise in oil prices that we have seen in 2022, which allows them to continue pumping money into the war effort against Ukraine. Thankfully, the war is still at a stalemate, but those profits are one of the only things keeping Russia afloat now. As a result, members of the G7 along with other nations agreed to place a price cap on Russian oil at $60 per barrel to reduce oil income while minimizing the effects of an upcoming EU embargo on Russian oil.

These measures take effect today, and it forced OPEC+ to make a tough decision regarding their stance on oil production. In a move that points to their uncertainty, OPEC+ said they would lock in current production levels ahead of the price cap move. Monday is an extremely big day for the energy markets considering both the price cap and the embargo go into effect, plus Saudi Arabia is expected to announce its prices for the spot-market customers in the West. Speaking of Saudi Arabia, President Xi of China is scheduled to meet with the Crown Prince on Thursday to discuss things like the energy sector. With all this scheduled volatility in hand, this decision allows OPEC+ to observe the effects of these scheduled events before making a large decision. The price cap looks to keep Russian oil in the market while reducing revenue from it to benefit both sides, and it might be the first of many policies the West institutes if the war escalates. Russia has said they would not sell oil to any country who puts the price cap in place, so we’ll see if countries stand together or pay the market price for Russian oil.

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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.

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