Observers in North America and Europe are watching a strategy that some Middle East economies are exploring: sourcing oil from Russia and then selling finished products back into European markets. This viewpoint was shared by Igor Yushkov, a prominent analyst at the National Energy Security Fund, during an interview with socialbites.ca. Earlier reporting by Vedomosti noted that Moscow-friendly states in Asia and the Middle East could pursue this approach.
“Saudi Arabia already purchases crude from Russia, processes it, and places the refined products on the world market. The same pattern follows for other countries in the region. Officially, the concept of buying oil from Russia and exporting oil products to the European Union is lawful. There are no explicit prohibitions. After the European Union, G7 members, and Australia tightened restrictions on crude imports, and as prices for Russian fuel hovered near a $60 per barrel ceiling, there is no ban on Russian-sourced oil being bought by Moscow’s allies at any permissible price level. They can then resell those products globally, including to EU nations,” he stated [Citation: Vedomosti].
In Yushkov’s view, the arrangement would likely result in European buyers paying higher prices for crude and refined products sourced from Russia indirectly through third countries.
“Oil from Asia and the Middle East may appear pricier to European buyers if discounts disappear. Additional logistics costs will also contribute to higher procurement costs. Previously, Russia granted partners a discount, roughly around $20 per barrel. In practical terms, when global oil stood around $85 to $90 per barrel, Russia sold fuel closer to the $60–$70 range,” he explained [Citation: Socialbites.ca].
Yushkov added that European buyers should not expect discounts on oil sourced through Asian and Middle Eastern channels to continue indefinitely.
“If Russia reduces its own oil exports further, the global supply gap could widen. Russian shipments could drop by 100,000 to 200,000 barrels per day. He suggested that oil prices might rise toward the $100 per barrel mark,” he forecast [Citation: National Energy Security Fund].
According to Yushkov’s outlook, Russia could shift more supplies toward Asia and the Middle East in the coming winter months, just before anticipated restrictions on imports take effect early next year.
Vedomosti reported that shipments of Russian petroleum products to allied countries increased substantially—from about 820,000 barrels per day in January to roughly 1.42 million barrels per day by September. The growth occurred as routes evolved, with Russia directing more exports to Turkey, the United Arab Emirates, Egypt, Saudi Arabia, Singapore, Malaysia, India, and China. A senior analyst from another firm noted that Middle Eastern nations might use Russian fuel for domestic needs while exporting their own output to Europe [Citation: Vedomosti].