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The US is Thinking about New Sanctions against Russia because of the Collapse in Oil Prices
March 19, 2020 22:45

The US is thinking about new sanctions against Russia because of the collapse in oil prices.

The White House could intervene in the oil war of Saudi Arabia and Russia. The introduction of new sanctions against Russia is also considered as tools. 

The administration of US President Donald Trump is considering the possibility of intervention in the oil price war between Russia and Saudi Arabia to stabilize markets,  The Wall Street Journal writes, citing sources. According to the interlocutors of the publication, the American oil companies asked for White House intervention. The US, in particular, is exploring the possibility of imposing new sanctions against Russia.

In relation to Saudi Arabia, it is planned to use diplomatic measures - through the State Department or the National Security Council. The White House may ask Saudi Arabia to abandon the announced increase in oil production and return to previous levels, one of the newspaper’s interlocutors said. Several sources said the administration was also considering strengthening cooperation with Saudi Arabia to keep it from returning to the alliance with Russia. 

OPEC countries and several non-oil exporting countries cartels have been reducing oil production since 2016 in order to maintain market prices. The transaction expires on April 1. Negotiations on March 6 ended in failure. After unsuccessful negotiations, Saudi Arabia launched a price war, offering record discounts on its oil to importers in Europe, Asia and the United States. Riyadh also announced its intention to increase oil production to a record level after the completion of the current deal and roll out oil from strategic reserves to the market.  This led to a collapse in oil prices. At the opening of the first trading day after the failure of negotiations, the cost of Brent futures fell by 30% - from $ 45 to $ 31.02 per barrel. This was the biggest drop in Brent prices in a day since the Gulf War in 1991. Since then, oil prices have continued to fall: on March 18, the price of Brent fell below $ 25 per barrel for the first time since May 2003.

The collapse in oil prices led to the devaluation of the ruble. On March 19, on the Moscow Exchange, the dollar, which was trading below 69 rubles on March 6, reached 81.66 rubles, the euro - up to 89.5 rubles.

Russian Energy Minister Alexander Novak said that the restoration of oil prices would take several months. Finance Minister Anton Siluanov said the collapse of world oil prices had a less negative impact on the Russian economy than the spread of coronavirus.

Author: Anna Dorozhkina

Tags: coronavirus Russian economy Russian oil sanctions  


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