00:00Let's now speak to Chris Wiefer, the CEO of Macro Advisory, an independent business consultancy in the Eurasia region.
00:07He joins us from Moscow. Chris, thank you so much for your time.
00:11How significant is this temporary lifting of sanctions for the Russian oil sector?
00:20Well, I guess there's two answers to that.
00:23First of all, of course, Russia will make a great deal more money by selling the oil that has been
00:30stranded, as you say,
00:31and also selling it at close to the market price, because since the U.S. sanctions were tightened late last
00:38year,
00:39Russia has, A, struggled to sell all of its exports, but B, has been selling at significant discounts.
00:46So now we can calculate that this measure will probably mean an additional $10 billion in the month of March,
00:55compared to what Russia earned in January and in February.
01:01And then the second reason for optimism is that, you know, this is the first move by the U.S.
01:08to relieve sanctions against Russia.
01:10It shows there's a measure of cooperation between the two, which we're hearing anyway.
01:15And it's generated some optimism that maybe it'll be the start of, you know, some process that could lead to
01:22maybe an end to the conflict
01:23and the start of easing sanctions more generally.
01:27So there are two key reasons.
01:29Yeah, that makes sense, that this could be the first step towards a more general lifting of those sanctions,
01:35particularly if this oil crisis continues.
01:37I wonder if you could just give us a sense of how much damage the sanctions against Russian oil have
01:44actually done,
01:44given that we know there have been some workarounds on the part of Russia.
01:50Well, there are some countries that have benefited from the sanctions.
01:54And, of course, China, India have been the biggest buyers of Russian oil.
02:00That, you know, previously would have gone to Europe, but it's now going to those two big Asian buyers,
02:06and the same with gas, and typically Russia has been selling at discounts to global markets.
02:12So that has helped, if you like, the energy costs in China, India, Turkey, and South Africa, one or two
02:19other countries.
02:20So they've benefited.
02:21And the European economy has correspondingly been hit because Europe used to get this relatively well-priced energy,
02:30oil and gas from Russia, has substantially cut it out,
02:34and is now paying more for its energy from the U.S. and from other markets.
02:42Russia's economy, of course, has suffered.
02:44It has not collapsed.
02:45It's not in any danger of collapsing.
02:48But clearly the loss of revenue has, you know, has hurt the economy.
02:54But there's not led to a crisis.
02:57So you've had this shift in energy from Europe to Asia.
03:01Quick question.
03:01I have to just ask you.
03:02The oil price, it actually is still around $101 a barrel.
03:06Do you think this move really is going to make any difference to stabilize, bring down the price?
03:13No, it's not going to bring it down.
03:15But it may prevent it from climbing, you know, higher over the short to medium term.
03:21But you remember you're talking about maybe 150 million barrels of oil.
03:25But the world consumes 100 million barrels of oil a day.
03:29And about 20 million barrels a day would have usually come out of the Strait of Hormuz.
03:34And that's now blocked.
03:35So traders and buyers of oil are looking beyond this.
03:39And they're generally fearful that if the blockage of Hormuz continues, then, you know, there will be a much more
03:47significant loss of oil.
03:49And remember, the real damage will be when the storage tanks in Saudi and in Qatar and the Emirates are
03:56full.
03:56Then those countries will have to stop producing.
03:59They will have to significantly slow producing.
04:02And it takes a very long time to restore that production, even when, you know, the Strait reopens.
04:09So traders are looking at this much longer term.
04:13And that's why the price is staying high.
04:15Yeah, makes sense.
04:15The longer this goes on, the more fears that it's going to be a long-term issue.
04:18Thank you so much, Chris Weaver, CEO of Macro Advisory Base there in Russia.
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