Market implications of Putin’s decree banning oil sales to countries imposing a price cap
In a brief interview on this question which accompanied a news bulletin on Iran’s English language international broadcaster Press TV, I was given the opportunity to comment on how this decree is likely to impact global oil markets in 2023.
Translations into German (Andreas Mylaeus) and French (Youri)
Die Auswirkungen der Ölpreisbremse auf die Märkte
Die Auswirkungen des von Putin erlassenen Dekrets, das den Verkauf von Öl an Länder verbietet, die eine Preisobergrenze festlegen, auf die Märkte
In einem kurzen Interview zu dieser Frage, das einer Nachrichtenmeldung des englischsprachigen internationalen Senders Press TV beigefügt war, wurde mir Gelegenheit gegeben, mich dazu zu äußern, wie dieses Dekret die globalen Ölmärkte wahrscheinlich im Jahr 2023 beeinflussen wird.
Conséquences du plafonnement du prix du pétrole sur le marché
Incidences sur le marché à la suite du décret de Poutine interdisant les ventes de pétrole aux pays imposant un plafonnement des prix
Lors d’une brève interview sur cette question qui accompagnait un bulletin d’information sur Press TV, le diffuseur international iranien de langue anglaise, j’ai eu l’occasion de commenter l’impact probable de ce décret sur les marchés pétroliers mondiaux en 2023.
Gilbert Doctorow 
What we saw last year was a short term shortage of oil that lasted 6 months.
The spot oil price at end 2022 is almost exactly the same as it was at start 2022,
https://ycharts.com/indicators/wti_crude_oil_spot_price
and forward prices continue to imply lower prices in 2023.
There is plenty of oil, it is a liquid, and as such will always find its own level, whether that means Russian oil goes westwards around the world or eastwards.
In the mean time you get a little disruption as the arbitrageurs do their work, ships get re-routed and oil refineries get adjusted to work on different grades of input oil.
Mevedev’s disruption to the market in 2023 is hardly going to be bigger or more unexpected than the shock in 2022 when pretty much every European country promised to stop buying Russian oil.
Note gas is not so “liquid”, it moves much better on pipelines rather than on ships. But even gas has returned to the prices of the start of 2022.
Both gas and oil had very big price rises during 2021 but despite big peaks are no higher now by end 2022.
LikeLike
Your analysis is too clever by half. You give start and finish but omit what happened between the two and why. Most importantly you are omitting the Chinese factor on oil prices, namely expectations of Chinese consumption based on its handling or failure to handle the disruptions of its Covid policies. there was a surplus of oil available when China dropped away due to Covid lockdowns. Now China is disrupted by the end of the zero Covid policy. Where Chinese growth will be in 2023 is unclear. You speak of reorienting refineries to one or anothe grade of oil as if that were a flick of the switch issue. It involves heavy investments and great resistance at the refineries. As regards gas, the fall in gas prices in Europe is due to the mad, spare no expense filling of the gas reservoirs ahead of the winter, then due to the very mild early autumn. What happens if winter in Europe turns really cold? It will mean that the gas stocks are depleted faster. In any case, filling the reservoirs in 2023 without Russian gas, as now seems likely, will not be an easy task. And that may just force gas prices up again. No one has complete information. NO ONE.
LikeLiked by 1 person
I believe you need a cover for your microphone to reduce the echo effect when you are interviewed. That is based on zero technical knowledge, but an educated guess. Think of the amount of money Fox invests in turning “news” into “entertainment” (their self-stated project). You are not peddling entertainment, and hence your investment for the sake of the viewer should reflect an even greater dedication to the truth than exists at Fox.
LikeLiked by 1 person
Dear Gilbert,
Sorry for the off-topic, but I got emboldened by your recent reply to my (and others of course) question about “the general mood in Russia”. I grew up in Russia but have been living in USA for almost 20 years now so, I think, I almost have a wider perspective than I would have had staying in Russia. Recently I stumbled upon several pieces of analytics, mostly from expats (from USA & Europe) living in Russia/Ukraine. The overall conclusion was that one of the biggest (political? cultural? sociological? not quite sure what tag to attach) problems in Russia is a massive poorly recognized inferiority complex with respect to everything western. I think I see it. Western is considered better, always. Western is considered gold standard. I remember watching American action movies back in school – I still remember that feeling of how cool English words sound compare to Russian ones etc. Things like “Евроремонт” 🙂 Everything is considered more civilized, more upscale in Europe. This is why they live better… I would really like to hear your opinion at some point whether you think such an inferiority complex exists, how massive it is you think, and whether you think there is any dynamics to it (it diminishes, grows, changes flavors etc). Thanks a lot in advance.
Sincerely,
Kirill
LikeLike
I have read of this “inferiority complex with respect to everything western” before and I think you are correct, in that it exists. In fact, it has existed for quite a long time: the West has been seen as “the Civilized Nations” for quite some decades and, perhaps, centuries.
I’ve also heard recently that this particular bubble has very much burst due to the clear disdain the West holds for Russian People and Culture (revealed in both sanctions on individual Russians and the copious number of comments from the West that reflect their thoughts that Russia is a backwards, horrid place that deserves only contempt). Many of the “West-loving” Russians have, in fact, fled to the West and left the country. And, in general, Russians in Russia are happy to see them gone.
That said, how true this is and how deep it goes will only be seen in the coming decades. Russia is clearly separating itself from the old hope of working with the West as an equal. We will see how this all works out in the long run.
LikeLiked by 1 person
As regards the past, straight up to the start of the Special Military Operation, what you say about the Russian inferiority complex rings true. For a substantial part of the business and social elites, their Russian activities were strictly guided by siphoning off wealth to be enjoyed in the West, which was where they loved to be, away from the быдло in their homeland, which we may translate as cattle or lesser beings. Such people have now largely left Russia; how far they will go now that their parasitical relationship with Mother Russia is cut remains to be seen. Now that Russia is going va banque and has cast its fate on the success of regaining economic sovereignty through import replacement and self-sufficiency the mood has changed in broad society. There is unease, to be sure, but the feelings about the West have passed from disappointment to contempt. The risk in Russia today comes from a growing superiority complex, that is to say, from scorn for Europe and its gutless leaders,from scorn for the malicious propaganda that infects all Western media and which they understand from the generous excerpts taken from US and European television that are shown on Russian state television in their news and talk shows.
LikeLike