LIVE MARKETS-What if the Russian oil does the trick
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WHAT IF RUSSIAN OIL DOES THE TRICK
With no sign of military de-escalation in the Middle East, there doesn’t seem to be quick fix for the turmoil around the Strait of Hormuz, despite U.S. President Donald Trump’s promises to provide insurance and guarantees for shipping firms.
But what if Washington eases up on Russia?
“It wouldn’t be outside of the U.S. playbook to soften its stance on a sanctioned oil exporter in order to pursue other foreign policy goals,” says David Oxley, economist at Capital Economics.
“After all, the U.S. softened sanctions enforcement on Iran’s exports to dampen the upward pressure on oil prices in the wake of Russia’s invasion of Ukraine,” he adds.
China and India are already the top buyers of Russian crude, though India has eased buying recently under pressure from Washington.
“Russian oil has contributed to the bulge in crude stored on water which, presumably, could be released and sent to willing buyers easily,” Oxley says.
The backdrop could worsen as major Gulf-based exporters appear more likely to cut production, while loading constraints limit the pipelines that can move oil to ports outside the Strait.
China imports about one-third of the oil that transits the Strait of Hormuz, and that crude accounts for roughly 45% of its total oil imports.
(Stefano Rebaudo)
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