N. Peter Kramer’s Weekly Column
The fact that Russia is banning the export of diesel and gasoline is causing rising prices for European car drivers further on the already tight global fuel market. According to the Kremlin, it is purely intended to stabilise domestic supply. “The temporary restrictions will help saturate the fuel market, which in turn will lower prices for consumers in Russia,” said Interfax, the Russian government news agency.
But western analysts say this is a significant escalation that raise fears that Moscow will use the oils supplies as a weapon of retaliation for western sanctions. Russia is one of the world’s largest suppliers of diesel and a leading producer of crude oil. It shipped more than one million barrels a day from January to mid-September, with Turkey, Brazil and Saudi Arabia among its top destinations.
The supply of crude oil from Russia and Saudi Arabia, the two largest producers, has been limited. As part of a broader agreement within OPEC+ (of which Russia is a part), both countries have agreed to gradually turn off the oil tap. Due to this agreed production restriction, oil prices have already risen by 30 percent since June.
Is Moscow taking new steps to deliberately tighten oil supply further? And this at a time when central banks are struggling to get inflation under control and crude oil prices may rise above $100 per barrel for the first time in thirteen months? “Russia wants to hurt Europe and the US. It looks like that the Kremlin wants to repeat last year’s playbook, when gas was used as a weapon”, the Financial Times wrote last week. “Putin and co. show that they are not done using their power over the energy market yet”.
Winter is coming!