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Can RUSSIAN OIL be "BLOCKED"? (The DEFINITIVE punishment) - VisualPolitik EN - YouTube
Channel: VisualPolitik EN
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about this a bit later on can the allies
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block russia's biggest export could the
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world do without russian oil listen up
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[Music]
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there is a lot of talk lately about
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natural gas because of europe's
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extremely high dependence on it but the
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truth is that russia is first and
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foremost a huge oil exporter to give you
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an idea in 2021 russian exported crude
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oil and oil derivatives gasoline diesel
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kerosene semi-refined etc etc worth
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approximately 180 billion dollars this
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is more than three times more lucrative
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than its natural gas export for which it
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earned about 55 billion dollars
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[Music]
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during 2021 every day of the year russia
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exported on average about 4.5 million
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barrels of crude oil and about 3 million
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barrels of refined products these
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quantities made it the world's second
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largest exporter of black gold behind
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only saudi arabia incidentally 70 of all
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its crude oil exports went to europe and
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the united states
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[Music]
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and visualpolitik viewers this is the
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oil that the united states has put in
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its sites to complete the breaking of
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the battered russian economy and i
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stress this because there is often a lot
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of confusion on this point in the media
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it is sometimes said that blocking or
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embargoing russian oil would mean
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needing to find an alternative source
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capable of supplying the world with
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about 11 million barrels a day but that
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is not true
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[Music]
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russia produces around 11 million
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barrels of oil every day but a large
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part of it is used for domestic
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consumption what's more in order to deal
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a severe bloat of its economy it would
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not even be necessary to replace all its
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oil exports just taking part of the
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mouth of the market would be enough keep
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in mind that almost 40 of all russian
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government revenues depends directly on
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oil and gas export
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[Music]
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in any case the point is that now the
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war has changed everything you see
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initially the sanctions imposed on
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russia excluded the energy sector
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including the banking operations that
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allow buying and selling of this
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commodity to be carried out
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this is the case for example of gazprom
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bank the country's third largest lender
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which is also in charge of managing the
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transactions of gazprom the russian gas
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giant well this bank has not been
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excluded from the swift system nor has
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it been restricted from dollar
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transactions
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however many banks refineries oil
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companies and ship owners reacted to the
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invasion and the resulting international
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sanctions by refusing to carry out any
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operations with russian entities whether
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it's because of reputational risk the
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fear that the sanctions will end up
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tainting them or that the sanctions will
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be extended and not allow them to
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collect their bill the fact is that the
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invasion of ukraine turned russian oil
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into a toxic product this helps explain
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new stories like this one
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shell to stop buying russian oil and gas
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and there's more according to data from
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several energy consultancies after the
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military storm erupted about 70 percent
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of russian oil began to have problems
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finding a buyer
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the outcome after invading ukraine
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russian oil exports could have plummeted
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during the first weeks of march by 35
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in the case of crude oil and about 50 in
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the case of processed products we are
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talking about approximately 1.7 and 1.3
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million fewer barrels per day in
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addition the rejection of russian oil
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has meant that it has to be sold more
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cheaply for example it is estimated that
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oil from the urals is being placed on
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the market with discounts of more than
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25 per barrel
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and that's not all if the war and the
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cycle of sanctions continue the real
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risk for russia according to the oxford
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university institute for energy studies
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is that its exports will be further
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reduced according to the estimates of
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this research center we could be talking
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about between 3.2 and 4 million barrels
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a day and that is approximately 50 of
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exports taking into account both crude
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oil and processed products this would be
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a huge blow to the russian economy it
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could even force russia in the absence
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of storage capacity to reduce production
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by shutting down wells this could be
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devastating keeping in mind that it is
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not at all easy to restart production
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from a closed well
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of course it may also happen that in the
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face of the lack of global supply russia
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finally would manage to sell its oil
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albeit at heavily discounted prices in
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that case let's say that the blow would
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be significant but not so devastating
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precisely for this reason the allies and
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above all the us government are
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scrambling to find ways to increase
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world oil production as quickly as
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possible and that is what explains
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headlines like this one
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white house tells oil industry we need
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more as fuel prices soar energy
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secretary says nation on war footing
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while colombia warns on venezuelan
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oversure it seems visualpolitik fans
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that the joe biden administration is
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trying its best to find more oil because
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finding a new abundant supply could
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allow the allies to push through the
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mother of all sanctions an oil embargo
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on russia an embargo a blockade that
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even if it were limited to crude oil and
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not to process products for example
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would mean sending russia back to the
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middle ages it would be something like
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checkmate for vladimir putin's regime
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now the question is how does the white
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house think it can get that new oil
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supply is it really feasible what could
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the consequences be we're going to get
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into that soon but first first we have
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to give joe biden's economic policy a
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slap on the wrist because following the
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invasion of ukraine the president of the
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united states has had to take such a big
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swerve that his entire energy policy is
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in a tailspin listen up but before we
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[Music]
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baden's biggest strategic mistake
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[Music]
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accelerate the energy transition to
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clean sources this was the electoral
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promise that led joe biden to place the
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oil industry in his sights and no no
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don't think that this time the promises
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remained in the campaign rallies not at
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all as soon as joe biden arrived at the
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white house he got down to work and
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began issuing executive orders against
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the u.s oil industry one after another
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in this way the new president wanted to
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make it clear that a new era had arrived
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in washington and don't forget that we
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are talking about the most important
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crude oil producer in the world so it's
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no joke
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[Music]
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and so on the 20th of january joe biden
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signed an executive order halting
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operations to exploit oil from the
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arctic national wildlife refuge
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cancelled authorization for the keystone
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xl pipeline to bring in more and cheaper
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oil from canada and ordered government
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agencies to research new regulations for
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curbing oil consumption and emissions
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and then a little later on the 27th of
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january another executive order
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established a moratorium prohibiting new
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leases of federal lands and waters to
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search for and exploit oil and take note
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because nearly 25 of all current and
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potential u.s production depends on
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fields located on federal lands or
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offshore
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and he wasn't done with all that he also
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ordered the interior secretary to look
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into ways to increase royalties and
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taxes on oil companies at a time when
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other departments are trying to reduce
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the capital and funding available to
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make new investments in fossil fuels and
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obviously if you cut available dollars
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you also make financing more expensive
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to make matters worse since then the
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granting of permits to carry out new
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exploitation or to build new pipelines
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or access roads to the fields has also
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slowed down for example where applicable
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it takes federal authorities about 140
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days to approve a drilling permit texas
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authorities take only two
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[Music]
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visualpolitik fans this whole package of
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measures combined not only reduced the
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potential supply of crude oil but above
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all sent a message loud and clear to the
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u.s industry it is not worth investing
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large amounts of money in the oil sector
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because the government will punish you
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and take note because the united states
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is currently producing around 11.6
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million barrels a day this is
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approximately 1.5 million barrels less
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than pre-covered production in other
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words if the biden administration had
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not thrown a spanner in the works it is
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very likely that we would be seeing much
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lower oil prices today remember those
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1.5 million barrels are equivalent to
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more than 30 of all russian crude oil
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exports and of course that caused the
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white house to do an about face check it
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out
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u.s puts pressure on shale industry to
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do whatever it takes to ease oil crisis
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but having said that the question we are
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all wondering is can russian oil be
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offset how exactly does the biden
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administration intend to achieve this
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well listen up
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[Music]
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how to exclude russian oil
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this is the million dollar question the
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question that could send all of vladimir
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putin's plans down the drain for good
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something like the final blow the white
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house and the other allied governments
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now want to achieve such abundant oil
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supplies that they can put the oil
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embargo against russia on the table but
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how on earth to achieve this is it
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really something that can be done well
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in order to try to achieve this we've
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identified a strategy with four fields
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of action that the allied governments
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have put forward and the first of these
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has to do precisely with the fracking
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industry
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[Music]
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despite all the hurdles the white house
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has put in the oil industry's path the
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truth is that the drop in production is
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mostly due to the industry itself you
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see the drop in prices between 2015 and
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2019 and then the coronavirus on top of
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that was devastating for north american
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fracking companies these companies lost
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tens and hundreds of millions and many
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of them ended up going bankrupt so now
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most are focused on investing less and
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taking advantage of oil prices to make
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cash pay dividends and buy back shares
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and while this guy higher oil prices we
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are seeing in the wake of the russian
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aggression may be too tempting in and of
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themselves there is a question we have
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to ask what could the us government do
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well they could start by changing their
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tune streamlining permitting
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facilitating cheap financing for new
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projects and also repealing the jones
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act
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the jones act states that only u.s
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flagships may move goods between u.s
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ports this makes it cheaper in many
[699]
cases to import foreign oil than to buy
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domestic oil for example according to
[704]
the california energy commission
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importing oil from the gulf of mexico
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can be 67
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more expensive than bringing it in from
[710]
foreign countries
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with all these measures north american
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oil production could increase by more
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than 1 million barrels per day by the
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end of 2022 and of course it's not just
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about the united states
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boris johnson opens door to fracking in
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response to ukraine war prime minister
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looking at all options as he prepares to
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drop new energy strategy then in second
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place we have the old and long-standing
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partners
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[Music]
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the united states wants to get the hell
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out of the middle east but it always
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ends up coming back in the end it seems
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almost like a curse but here we are
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again if we're talking about oil we have
[748]
to talk about the middle east and two
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countries in particular saudi arabia and
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the united arab emirates these countries
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are among the few producers in the world
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that invest money in having a lot of oil
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in storage and reserve production that
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is they are able to increase their
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exports very quickly if an unexpected
[764]
event occurs look at this box for
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example
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[Music]
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as you can see these four countries have
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the capacity to increase their combined
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production by 4 million barrels each day
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practically the equivalent of all of
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russia's exports so even if they were to
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use 50 of this capacity things could get
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very very difficult for moscow
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only opec can help the west replace
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russian oil the problem is that the
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current relations between the white
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house and the saudi arabian government
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are rather bad but in any case that is
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what they are now working on and so far
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it seems that the united arab emirates
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has started to respond
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united arab emirates to nudge opec
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allies to increase oil production and
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then there are the bit enemies with whom
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washington now seems to want to seek a
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truce i am talking about iran and
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venezuela in particular washington is
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getting down to work reaching a truce
[813]
with iran and lifting some of the
[814]
sanctions on iran could inject a lot of
[816]
supply into the market
[818]
iran can reach top oil output two months
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after nuclear deal oil minister we're
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talking about approximately 1.4 million
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more barrels of oil per day
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[Music]
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in the case of venezuela this may be
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even more complicated the venezuelan oil
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infrastructure is so damaged and
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deteriorated that it would be difficult
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to increase production by half a million
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barrels in a year's time not to mention
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the domestic criticism it has unleashed
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in the united states be that as it may
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the white house calculation is clear we
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are talking about 1.5 to 2 million
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barrels a day
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[Music]
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let's see there is no simple solution
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and probably what do you want me to say
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it will probably end in nothing but i'm
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sure that now you understand the
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backstory to the news and washington's
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attempt of reproachment to tehran and
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caracas i've already said that the
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invasion of ukraine has changed
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everything these days in washington they
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understand that moscow poses a much much
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much greater threat and it is on this
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threat that they have to focus all of
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their attention but we still have the
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fourth possibility
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[Music]
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virtually every country has strategic
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oil reserves to draw on if for any
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reason the supply fails or becomes too
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stressed
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us and allies agree to release 60
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million barrels of oil from the reserves
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as russian invasion of ukraine causes
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price spike well u.s strategic reserves
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which are the largest in the world
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currently amounts to about 575 million
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barrels due to this the united states
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and allied countries could go much
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further and make unprecedented use of
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these reserves to place 100 to 150
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million barrels or even more on the
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market to reduce tension until the new
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sources of supply we have discussed were
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up and running yes it would be risky but
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in addition to alleviating the current
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supply shortfall the measure could be
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linked to a commitment to replenish
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reserves over the next few years which
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would guarantee additional demand that
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would further stimulate investment in
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the industry i don't know maybe it's a
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risk worth taking
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these are the four courses of action
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that allied governments are considering
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to replace russian oil in addition there
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is one other factor that may prove to be
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significant the weak situation of the
[943]
chinese economy the war in ukraine
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sanctions and above all the increase in
[948]
the price of raw materials and energy
[950]
may slow down the global economy this
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could translate into lower than expected
[953]
oil consumption and provide some margin
[955]
but of course this is something that
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leads directly to a final question why
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block russian oil
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well the russian economy is reeling from
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international sanctions imposing an oil
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embargo even if it is partial or does
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not affect refined products could be a
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checkmate that is why washington has
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wasted no time admitting that they are
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working on this path and take note
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because the kremlin knows it too and
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that is why they tried to drum up fear
[982]
with statements like this one
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it is absolutely clear that the
[985]
rejection of russian oil would have
[987]
catastrophic consequences for the global
[988]
market the price increase would be
[990]
unpredictable it would be 300 per barrel
[993]
if not more alexander novak russian
[995]
deputy prime minister be that as it may
[997]
the numbers say that replacing russian
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oil is possible although it would have
[1000]
to be done progressively of course if
[1002]
this were to be achieved we would be
[1004]
facing a very very tight market this
[1006]
means that if things continue like this
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gasoline prices will be sky high for a
[1010]
long time although surely not as high as
[1012]
moscow is threatening
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britain to phase out russian oil imports
[1016]
by the end of 2022 that said i'm sure
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many of you are thinking but josh what
[1020]
about china what role could china play
[1022]
well soon we will publish two new videos
[1024]
where we will tell you what role china
[1026]
is playing and what role it could play
[1027]
so don't forget to subscribe to
[1029]
visualpolitik and click on that little
[1030]
bell icon to be notified of these new
[1032]
videos but the question now is will the
[1034]
allies succeed in finding an alternative
[1036]
to russian oil will we see an oil
[1038]
embargo leave your comments below and if
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you found this video interesting don't
[1042]
forget to give it a like all the best
[1043]
i'll see you next time
[1046]
[Music]
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you
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