Oil or America: Washington’s Warning, an Alarm for Russia’s Allies
Oil or America: Washington’s Warning, an Alarm for Russia’s Allies
Amid rapid geopolitical developments and unprecedented energy market fluctuations, the roles of countries like Russia, China, India, Turkey, and Brazil have become more prominent than ever in the global oil landscape.
The new U.S. sanctions against Russia, particularly in the energy sector, not only have consequences for the Kremlin but also seriously alter the balance of the global oil market.
In this context, the decisions and positions of major oil-importing countries from Russia play a decisive role in the future of this market.
In this report, Saeed Aghenji, editor-in-chief of Irangate News Agency, analytically examines the potential consequences of U.S. oil sanctions against Russia and the reactions of countries like India, China, Turkey, and Brazil, which are on the brink of a difficult choice between short-term economic benefits and long-term political pressures.
The immediate intensification of U.S. sanctions against Russia led to a price drop, causing the price of a barrel of Brent crude oil to fall by 56 cents, equivalent to 0.8%, during Tuesday’s global oil market trades, bringing it below $69. However, the U.S. President simultaneously warned that if the 50-day deadline is violated, tariffs of up to 100% will be imposed on Russian oil imports.
This warning also includes secondary tariffs, meaning that countries purchasing oil from Russia will also be targeted by the sanctions. Some global oil market analysts have warned that if these sanctions are implemented, the outlook for the global oil market will be seriously transformed. Countries like China, India, Turkey, and Brazil, which are major buyers of Russian oil, will have to choose between cheap Russian oil and the cost of losing the U.S. export market.
After Russia’s attack on Ukraine in 2022, India quickly became one of the largest buyers of Russian oil, with over a third of its oil imports coming from Russia this year, while before the war, Russian oil comprised less than 1% of India’s import basket. Before Russia’s invasion of Ukraine, India primarily purchased oil from Iraq, Saudi Arabia, and the United Arab Emirates.
Last year, India became the most significant buyer of Russian oil, and this year, 35% of the country’s oil imports have been sourced from Russia. According to recent data, in June, India imported about 2.1 million barrels of crude oil daily from Russia. After India, China is the second-largest importer of Russian crude oil, consistently buying over a million barrels per day from Russia since the start of the Ukraine war, accounting for 15 to 20% of China’s total oil imports.
Between 2019 and 2021, Turkey sourced 12 to 20% of its crude oil imports from Russia. Particularly since the second half of 2022, Turkey’s crude oil imports from Russia have significantly increased, with Russia’s share reaching 35 to 40% of Turkey’s total crude oil imports in 2023. Before the Ukraine war, Brazil’s crude oil imports from Russia were minimal, less than 1% of its daily needs, due to Brazil’s focus on domestic crude oil production and limited imports from countries like the United States and some African nations.
Brazil, a major oil producer in Latin America, took advantage of Russian oil discounts after Western sanctions on Russia, increasing imports of some petroleum products like diesel and fuel oil from Russia. As a result, Russia became one of Brazil’s major diesel suppliers in 2023, although Brazil’s imports of Russian crude oil remain low.
If U.S. oil sanctions against Russian oil buyers are enforced, countries like India, China, and Turkey will be able to source their oil needs from other countries like Saudi Arabia or Iraq, but this substitution will come at a high cost.
In May, the price of Saudi oil was $5 more expensive than Russian oil, and Iraqi oil was 50 cents more per barrel than Russian oil. Brazil can also substitute its imported petroleum products from Russia with other diesel and fuel oil exporters, but this replacement will not be cheap.
In addition to the potential increase in energy prices, the four emerging and developing economies of India, China, Turkey, and Brazil face the risk of losing access to the world’s largest economy, the United States, a market valued at approximately $80 billion for India, over $500 billion for China, around $40 billion for Brazil, and slightly more than $16 billion for Turkey.