Putin Could Hurt Major US Oil Companies
If Vladimir Putin can get Donald Trump to reopen access to nations Russia used to export oil to, the Russians could flood the global market with crude. This could be good for cash-starved Russian producers but would dent the profits of major US oil firms. These firms’s profits rely on oil prices north of $60 to make substantial profits.
Future Of U.S. Sanctions
According to Bloomberg, “The latest US sanctions on Russia’s oil trade have brought a swath of tankers that deliver Moscow’s crude to a halt — reinforcing the significance of the measures in any negotiations over ending the war in Ukraine.”
While the damage to Russia’s GDP is untold, it must be meaningful.
Semafor says, “Trump’s potential rapprochement with Russian President Vladimir Putin over the war in Ukraine could deliver a major victory for Russia’s oil and gas companies — at the expense of their American competitors. The Kremlin is keen to see the US lift energy sanctions, and the countries agreed to work toward “historic economic and investment opportunities.””
Could Crude Drop To $50?
The question is how low crude prices would go if Russian oil entered global markets while the US pumped at record levels. After hitting $120 a barrel in mid-2022, oil prices have dropped to $70. The only time the price was below $50 was just before the COVID-19 pandemic and then a year after it started. An abundance of oil might drive the market to retest those price points. OPEC would need to decide how to modulate its production.
Could crude drop back to $50? If Russia can export anywhere, the answer is “yes.”
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