Plugging Russia’s hole in the oil barrel
With no end in sight to the Russia-Ukraine war, fuel supply and prices continue to be a pressing concern for economies all around the globe. Governments are searching for viable alternatives to Russia’s crude, but what if there just aren’t any?
War and oil, war on oil
Oil prices have been steadily rising since January of this year, forcing Filipino consumers to suffer through 11 straight weeks of price hikes, and it can only go downhill from here.
As the Russia-Ukraine conflict continues, the US Energy Information Administration expects that crude oil prices will go as high as $100 per barrel in the coming months– but Russian Deputy Prime Minister Alexander Novak goes even further, estimating that oil prices could go up to $300 per barrel if the West continues to shun Russian crude.
Oxford’s Our World in Data recently launched a data explorer for the world’s fossil fuel reserves, showing the top countries that hold the largest supply of oil. Russia ranks eighth among countries with the largest oil reserves, the highest among European countries.
The global demand for oil is about 100 million barrels per day (bpd), and Russia produces about 10 million bpd, exporting about half of that, and an additional 3 million bpd of oil products. Europe is so heavily dependent on Russia for their oil supply that the EU is currently divided on matters concerning Russia’s oil sanctions.
The search for alternatives
As the war forges on and oil prices surge, governments are looking for alternative energy sources. The International Energy Agency’s oil Market Report emphasized that there are very limited options for any government looking to replace crude oil and oil products from Russia– so what else is there?
“In reality, no country can plug the hole that Russia would leave in the market in the event of a global ban,” says Sophie Udubasceanu, global crude oil expert at energy market analysts ICIS. While there are many other oil producing countries, it would take months of rerouting supply chains, spudding new wells, and billions of dollars for any other country to replace the amount of oil that the world sources from Russia.
Some sources are pointing out that if the transition to green fuel had happened sooner, if world leaders had pushed for it and made compromises earlier, perhaps this could all have been avoided. But there’s no use crying over spilled milk, right?
In the meantime, here’s a tidbit of good news: local oil companies announced a significant fuel price rollback on Monday, March 21. There is a necessary disclaimer that the downtrend could be easily reversed if the Russia-Ukraine conflict gets worse in the coming weeks– but we’ve all had enough bad news. For now, let’s celebrate this win.
