The United States is verbal on its aim to oust Russia from the world oil market. The European Union has declared their desire to abandon Russian oil as soon as possible. But they realise that it is not possible to find a replacement quickly.
As per Rosstat, the official statistics organisation in Russia, in 2021, Russia produced 524 million tons of oil and gas condensate and exported 230 million tons, about 44% of total production. At the same time, oil accounted for 22.4% of all Russian exports and 41.3% of all fuel and energy products exports.
The United States imposed an embargo on Russian oil supplies since the total volume of imports of oil and oil products from Russia did not exceed 8% of U.S. energy imports.
The dependence of many E.U. countries on supplies from Russia is much higher. And it is problematic to impose an embargo on the E.U. immediately.
The European politicians are hunting for additional volumes of oil from non Russian sources. The most obvious option is to increase production in the Gulf countries. Only Saudi Arabia and the United Arab Emirates can do it in the short term. The authorities of these countries do not show any particular desire to meet the wishes of Washington. Saudi says the U.S. has no credibility under POTUS Biden and the U.A.E. sent back U.K. Prime Minister Boris Johnson without further opening up their oil wells.
Another option is to lift sanctions on Venezuela and Iran, at least partially. But the governments of these countries will certainly demand or have already demanded significant concessions from the West.
To sum up, it will be very difficult to replace the volumes supplied by Russia. And this process will take a long time.
Michael McFaul formula
The former U.S. Ambassador to Russia, Michael McFaul, has his ideas on the issue. He proposes not to impose an embargo on Russian oil supplies. But this is not a concession to Russia.
In his opinion, “democratic countries” should withhold payment for Russian oil until the end of the special operation in Ukraine. But they must not remain without oil.
“Russia should continue to export oil to democratic countries, but recipients should hold payment for these energy resources in escrow accounts until Putin ends the war. Then it’s Putin’s decision whether to cut off oil supplies or not,” he writes on his Twitter account.
Iranian oil might not fructify in the near term
McFaul’s idea can work if there are real contenders for replacing Russian oil. The U.S. is hoping that Iranian oil comes into the market as soon as possible. However, there are roadblocks.
At a meeting with Israeli intelligence agents Mossad, Israeli Prime Minister Naftali Bennett said, “While one of our eyes – like the whole world – is looking at Kyiv, the other eye is intensely watching what is happening in Vienna.” The deal on the Iranian nuclear program is close to being finalised and is likely to take place, not so much because there are no more obstacles left in its long path, but because of the West’s desire to finally release Iranian oil on the world market to replace Russian exports and put pressure on prices.
The U.S. is temporarily closing its eyes on the activity of pro-Iranian proxies attacking US-controlled territory in Iraq and Syria. There are hints that the U.S. might remove the Islamic Revolutionary Guard Corps (IRGC) from the list of terrorist organisations. Not to mention the very essence of the deal, which most likely will not be a significant obstacle to Iran’s way to its own nuclear weapons, if it, of course, so desires. However, first, we need to see the final text of the treaty.
In early March, diplomats reported that 99.9% of the points of the road map had been agreed upon. It was actually a complete agreement. In particular, Tehran, in exchange for a partial lifting of sanctions, agreed to increase the level of uranium enrichment to 5%, as well as to release Western citizens imprisoned in Iran. The West has also promised to unfreeze more than $7 billion worth of Iranian foreign assets. IAEA chief Rafael Grossi agreed to a comprehensive technical cooperation deal.
Russian representatives have slowed down the course of negotiations in Group 5 + 1 (permanent members of the U.N. Security Council and Germany). Moscow demanded written guarantees from the Americans that the sanctions regime would not apply to relations between Russia and Iran. What exactly was discussed was not reported.
Russia is on the Iranian side, and if it brings out the oil to counter the Russian oil, it loses Russia as an ally. Russia, for now, has withdrawn from the talks.