00:00Faced them with anger among his voter base at rising prices of petrol for their cars and their trucks,
00:05Donald Trump's expected to act.
00:07The chief beneficiary of this could well be Vladimir Putin's Russia.
00:11A relaxation of sanctions on Russian oil, sanctions linked to Putin's illegal war on Ukraine,
00:17could see his oil stocks sold via India and then from there to the rest of the world.
00:22It's been confirmed Trump and Putin spoke by phone in the last 24 hours.
00:27Here's Emerald Maxwell.
00:31It's the world's second largest oil exporter.
00:34And unlike its Gulf competitors, it's safely outside the Iran-U.S.-Israel war zone.
00:41Russia is emerging as the one real winner of the conflict as it benefits from high oil prices.
00:47It gains new resources to finance its war against Ukraine as energy prices rise.
00:53It profits from the diversion of military capabilities that could otherwise have been sent to support Ukraine.
01:03Trump's administration is keen to boost world's supplies of oil so as to bring prices down after they spiked Monday
01:10to over $100 a barrel.
01:12The U.S. president told reporters that he'd had a very good call with his Russian counterpart
01:17and spoke about lifting sanctions while avoiding identifying whom with.
01:22So we have sanctions on some countries.
01:24We're going to take those sanctions off until this straightens out.
01:28Then who knows, maybe we won't have to put them on.
01:30There'll be so much peace.
01:31The Kremlin said the idea of lifting oil sanctions had not been discussed in detail with Washington.
01:36The move, though, is opposed by Europe, as it would complicate efforts to deprive Moscow of revenue for its war
01:43in Ukraine.
01:44Vladimir Putin on Monday offered European countries access to Russian oil and gas in return for their cooperation.
01:53If European companies and European buyers suddenly decide to reorient themselves and provide us with long-term, sustainable cooperation,
02:03free from political pressures, then yes, of course, we're ready to work with Europeans too.
02:13After being effectively cut off from its European market following the Ukraine war,
02:18Moscow turned to India and China to sell its oil.
02:21Last week, amid the escalating conflict and less than a month after India agreed to stop buying Russian oil
02:27in exchange for a U.S. trade deal, Washington said it could buy it again for 30 days.
02:34For more on this, we're joined by an expert on Russia's energy sector.
02:38Sergei Vakalenko is senior fellow at the Carnegie Russia Eurasia Center.
02:44Sergei, thanks for being with us.
02:45It may strike many people watching this that there's something quite immoral,
02:49if, as we're suspecting, Vladimir Putin looks likely to cash in when all the chaos is happening all around him.
02:58Well, yes, he was one of the chief winners of all this.
03:03Russia is one of the major petro-states, and it would be able to continue selling its oil.
03:11One thing is, though, Russia is not a swing producer.
03:14Russia is not going to increase its oil production.
03:17Most likely it's not going to increase its oil exports because of the current shortage.
03:22It wouldn't be able to.
03:23On that hand, Russia was exporting during all the four years of the war,
03:28pretty much at the same pace as it was before,
03:32and it was only limited by OPEC-plus agreements rather than its inability to export because of the sanctions.
03:40Some people might be suspicious of the fact that Donald Trump is considering easing the sanctions on Moscow.
03:46Is this another sign, perhaps, that he feels more, how can I put it, happier in Putin's company rather than
03:52anybody else's,
03:53basically viewing Putin as his friend and ally?
03:56What is he doing at the moment, really?
03:58It's just legitimizing what's going on anyway.
04:03What actually was pushing away the main purchasers of Russian oil, India and China,
04:09away from Russian oil was the glut in the global oil markets.
04:13When they had an option to choose, India, in particular, might consider buying some other oil rather than Russian.
04:21When the market is in balance or if there is a shortage, India would buy it nevertheless.
04:28So what Donald Trump is really doing now is effectively saving his face,
04:32pretending that his policy towards India work.
04:38So all these fine words that we've heard about sanctions,
04:41about trying to prevent Vladimir Putin's war machine from growing,
04:45so the attacks on Ukraine can be sustained,
04:47it's all been kind of words and behind the scenes the oil's been sold all the time.
04:52That's what you're saying, isn't it?
04:54Pretty much so, at least when it comes to volumes.
04:58When it came to discounts, indeed, sanctions did matter to some extent.
05:02What mattered most was, again, the surplus of oil,
05:06which allowed the few remaining buyers of Russian oil, India, China and Turkey,
05:11to demand higher discounts and threaten that they could buy some other parcels.
05:16When there is a shortage, it just doesn't work.
05:19So to a very limited extent, when it comes to limiting Russian revenue,
05:24sanctions did work.
05:25Probably the most powerful sanction of that sort
05:29was the European decision not to import any Russian oil whatsoever,
05:33and that's been three years old by now.
05:36But other than that, India and China kept buying Russian oil.
05:40To placate Donald Trump, India has reduced Russian purchases, reduced,
05:46didn't stop them, from something like 1.8 million barrels per day
05:50to 1.2, 1.3 million barrels per day,
05:54just to pretend that indeed it complies with Donald Trump's requests.
05:58But even that was over since the Supreme Court took the main weapon
06:04that Donald Trump was using against India,
06:08the excise tax on India goods.
06:14It was proclaimed illegal.
06:17So he didn't even have anything to threaten India with.
06:21So can I just sort of ask you a question
06:23that's slightly off script here a little bit?
06:25I'm just thinking, as you're telling me about this,
06:27and it all feels very cynical from my perspective,
06:30thinking about how this has all been done and all been happening,
06:33whilst, of course, people are battling away in a war scenario.
06:38Couldn't Trump basically meet the problems that he's got
06:41by using the oil that he's getting from Venezuela?
06:44Wouldn't that actually do what he needs it to do,
06:46rather than sending money Vladimir Putin's way?
06:52Venezuela production is minuscule.
06:54Its exports were less than 1 million barrels per day,
06:57something like 700,000 barrels,
07:00while Russia's export is 7 million barrels.
07:03Venezuela's oil is quite specific,
07:07and there are very few refineries in the world that can deal with it.
07:10And it wouldn't be in anybody's ability
07:14to increase Venezuela's production
07:17after 10 or 15 years of neglect
07:19in a matter of weeks or months or something like that.
07:23So no, he can't use Venezuela for that.
07:26So even though the US has the refineries
07:28that can handle Venezuela's type of oil,
07:31it's particularly heavy, I believe,
07:32it still wouldn't be viable, you're saying.
07:35Russia is far more adept at exporting its product
07:38and can easily fill the gap in that sense.
07:40I'm wondering whether this would be enough
07:43to reverse the decline in Russia's economy
07:46that we've seen during the war in Ukraine.
07:49Would this kind of boost of oil sales be enough to do that?
07:53Really depends on time.
07:55In the first two months of 2025,
07:58Russian state budget has run $35 billion deficit.
08:04Every dollar in price increase of oil
08:08adds $1 billion per month
08:10to Russian state budget surplus.
08:14So, well, do your math.
08:16Effectively, if oil price goes up by $20 a barrel,
08:22Russian state budget is balanced.
08:25It's not in the deficit anymore.
08:28Russian state doesn't have to borrow that much.
08:30Interest rates could go down.
08:33The rest of the economy could borrow.
08:36Because what was happening really
08:37was the state was crowding out
08:40all other borrowers in the capital markets.
08:43And the enterprises pushed away from the capital markets.
08:49They had to curtail their production.
08:50So they were suffering.
08:52So what's going on really is that
08:54Russian economy at the moment stagnates.
08:58It's probably in a small decline,
09:01something like 0.5% per annum,
09:03something like that.
09:04But it's not an implosion of a kind
09:06that we saw 35 years ago in 1990.
09:10But yes, growing oil prices
09:11and reduction of discounts
09:13between euros and Brent
09:15is going to help quite a lot.
09:18But it's just a matter of time.
09:19If it's going to last for a week,
09:22a month, two months,
09:23it's not going to make much of a difference.
09:26If the effect of this war
09:28is going to be felt
09:29for until the end of the year
09:31or longer,
09:32then yes,
09:33it would change some things.
09:35Sergei Vakalenko
09:36of the Carnegie Russia Eurasia Center.
09:39Thank you, sir,
09:39for your straight talking
09:40and for that very clear analysis
09:42of the situation.
09:43Putin perhaps set to cash in
09:45if those sanctions are relaxed.
09:47But as Sergei points out,
09:48Russia already selling its oil
09:50and continuing to sell its oil
09:52in spite of all the fine words
09:53and threatening words
09:56from various world leaders,
09:57it hasn't really affected
09:58how sales are going through.
09:59Sergei Vakalenko,
10:00thank you for joining us, sir,
10:01and thank you for clearing that up for us.
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