Against the backdrop of rising oil and gas prices, Russia is receiving more and more money from abroad – despite sanctions and political pressure. Western companies, bypassing restrictions, are buying up energy carriers and are not yet ready to give it up. The most enterprising ones use cunning schemes with a cocktail from the “forbidden”.
The changed terms of foreign trade turned out to be partly positive for Russia. In the first quarter, the current account balance of payments is positive. The surplus exceeded $58 billion, two and a half times more than in the same period last year, the Central Bank notes.
The indicator includes the trade balance (exports of goods and services min-us imports), wages of Rus-sians abroad, dividends fro-m investments abroad. This also includes humanitarian aid and monetary donations.
In other words, the current account balance of the balance of payments is the difference between all the assets that entered the country and left it.
It was possible to get into the plus at the expense of rising energy resources. In early March, gas prices in Europe reached a historic high of $3,892 per 1,000 cubic meters. Oil did not lag behind: a barrel of Brent brand cost $130 for the first time since 2008.
Demand for black gold is growing despite the sanctions. Foreigners are not ready to give up their usual fuel. Entrepreneurial Western companies make a cocktail of Russian Urals and other varieties.
For example, the Ameri-can Shell works according to this scheme. The concern allows its traders to buy diesel fuel containing Russ-ian hydrocarbons. The pro-duct, nicknamed “Latvian mixture”, is prepared in the port of Ventspils.
I had to go for it because of the losses. Shell lost five billion dollars because it stopped all operations in Russia.
So did ExxonMobil. Ne-xt in line is the Norwegian oil and gas giant Equinor. So far, the company has not stopped investing in Ru-ssia. But everything seems to be going that way. Me-anwhile, British BP is giving up almost 20 percent of Rosneft. And this is potentially minus 25 billion dollars.
However, high oil and gas prices will help offset the losses, analysts believe.
Focus on Asia
In addition, Asia is actively buying up Russian black gold against the backdrop of sanctions. For example, China has a record 1.6 trillion tons. Not far behind is India, the third largest importer of crude oil in the world. It has a huge potential for increasing purchases. In a month and a half, the country purchased 14 million barrels of Urals from Russia. For comparison: for the whole of last year – 16 million.
This difference is due to geographical factors. India preferred to buy oil from Iran, which is closer. Fuel was transported by sea. They switched to Russian raw materials because of discounts, but even with a discount, quotes are high.
According to some reports, Moscow promised to pay for transportation and insurance. In addition, New Delhi is expanding settlements in national currencies, as is China.
As global reserves deplete, discounts will gradually decrease. Due to anti-Russian sanctions, the global market will lose seven million barrels per day. This is one of the most serious violations of oil supplies in history, OPEC Secretary General Mohammed Barkindo said at a meeting with EU representatives. The cartel will not be able to reimburse these volumes.
At the same time, the EU still intends to abandon “politically incorrect” energy resources. But not right away, it takes time. Some countries in the region “depend on Russian oil and gas by 100 percent,” said the head of the European Commission, Ursula von der Leyen. Deliveries from the US to Europe will cost many times more.
The rejection of Russian black gold promises “catastrophic consequences” for the world market, warns Deputy Prime Minister Alexander Novak. Oil quotes will soar to $300 per barrel and even higher. No good will come from a ban on gas. The German economy alone will lose over 200 billion euros, Bloomberg analysts have calculated.
Nowhere to go
During the year, due to falling demand, sanctions and problems with logisti-cs, Russian imports will de-crease. Exports will decrea-se by 20-30 percent in phy-sical terms. But since two-thirds of it is energy, as supplies decline, fuel prices w-ill rise. There has not been such a favorable environm-ent for 15 years, notes And-rey Loboda, director of ext-ernal relations at BitRiver.
“The inflow of currency in the balance of payments is likely to be excessive until the end of the second quarter,” he says. “There is a unique situation: despite geo-economic tensions, the flow of money from abroad could reach $250 billion by the end of the year.”
However, not everyone is so optimistic. “It is worth focusing on more modest estimates,” advises Mark Goykhman, chief economist at the TeleTrade information and analytical center. “If they are exceeded, it will be a pleasant surprise. In the second half of the year, due to a slowdown or even recession in the global economy, oil prices and demand for it will return to the levels of early 2022: $70 per barrel of Urals. As a result, the current account balance will be a moderate $155-160 billion. Taking into account the net outflow of capital from the country, this result can be considered good.”
Meanwhile, many domestic companies that sell abroad do not know what to do with foreign exchange earnings. There is simply no demand for it. Against the backdrop of sanctions, the import of goods from abroad has decreased. Importers no longer need dollars and euros in their previous volumes. At the same time, in accordance with the presidential decree, exporters are required to sell 80 percent of their income in foreign currency. Perhaps soon the threshold will be softened. For now, the problem remains.
“The government understands that it makes no sense to just put the currency in a jug. In addition, its large flow due to the mandatory sale can overstrengthen the ruble. This will negatively affect competitiveness. Or accelerate inflation. There will be a lot of money supply, while the commodity supply is limited”, – explains Petr Zabortsev, director of innovation at OS-Center.
In such circumstances, the government may go for a forced reduction in exports. “But following the reduction in the current account surplus, output and investment in the commodity sectors will stop. This is fraught with an even greater fall in GDP,” the expert warns.