U.S. oil sanctions against Iran and Venezuela increased demand for oil from Russia, which allowed Russian exporters to earn at least $905 million in additional revenues between November and July, according to Bloomberg’s calculations.
The calculations take into account the difference between the price of Russia’s exported Urals oil and the Brent benchmark over the period compared to the five-year average, TASS explained.
The demand for Urals in the Mediterranean region is at its historic peak, according to analysts polled by the agency.
The U.S. administration imposed sanctions against Venezuela at the end of January 2019, and tougher sanctions against Iran cane into effect in May (entered into force in November 2018, but with exceptions).
The director of the Centre for International Energy Markets Studies, the Institute of Pricing and Regulation of Natural Monopolies at the Higher School of Economics, Vyacheslav Kulagin, speaking with a correspondent of Vestnik Kavkaza, noted that all other suppliers benefited from a drop in oil supply from Venezuela and Iran. "It is important to note here that Russia has a rather low production cost compared to various types of unconventional production in the U.S., Canada and European countries, and even with the URALS price of $40 per barrel, our oil production would not decrease. Therefore, in the first place it was beneficial for the U.S. oil workers, as the prices increased due to sanctions allowed them not to reduce drilling volumes and not to close new projects," he said.
"Iran was one of the main oil suppliers to the Mediterranean market until recently, and other key players, including Russia, have taken its place, but we must not forget that Russia is limited by the OPEC + agreement. Again, U.S. and European oil companies have an advantage here because they are not bound by the OPEC + deal. In order to supply more oil to one or another Mediterranean country, we need to reduce supplies elsewhere," the expert noted.
"However, if the sanctions mechanisms cease to exist or mechanisms to bypass them are found, restricted players will splash their volumes onto the market and prices will drop. The question remains when it may happen, because problems with the oil industry in Venezuela cannot be to solve in a short time, and when it is combined with a whole set of other economic and political problems, the process becomes extremely complicated," Vyacheslav Kulagin concluded.
