The Russian-Ukrainian war is already dramatically changing the global balance of power. This is a systemic conflict that, regardless of the outcome on the field, will change the multipolar trend in the global distribution of power that emerged after the collapse of the Soviet Union. Although a military confrontation between Russia and NATO is seemingly out of the question due to the nuclear balance of fear, at the economic level, what is happening in relations between Russia and the West and especially Russia and the EU, the day after the Russian invasion is equivalent to the previous and almost total economic war from the US, the EU and most of their G7 allies.

That the EU Russia was not ready for this economic war, as evidenced by the fact that natural gas supply cuts in Russia, which escalated between July and September 2022, caused natural gas (GHG) prices and electricity in the previous year increased fifteen times. The total cost of this increase, shared among governments, businesses and consumers, has reached $1 trillion, according to an IMF report released in December 2022. euro or 6% of EU GDP. However, this testifies to the determination of the Europeans that, despite this price, they did not hesitate for a moment geopolitically and militarily to move closer to Ukraine, seeing that any defeat of Kiev would be equivalent – given the satelliteization of Belarus and Kazakhstan Russia – with the re-establishment of a new Russian empire with strong revisionist tendencies, even the eastern borders of the EU

It is no exaggeration to stress that the goal of the US-EU relationship is to turn the world’s 11th largest economy into an economic pariah, a giant “North Korea” cut off from the web of economic globalization. For Russia, this globalization was based on its role as an energy-exporting “superpower”. But what did this “title” correspond to?

Over the past twenty years, Russia has consistently been the largest exporter of LC. the world’s third-largest coal exporter, while after 2003 Russia has consistently been the world’s second-largest exporter of crude oil (after Saudi Arabia), the world’s second-largest oil exporter (after the United States), and the world’s largest power oil exports, including exports of crude oil and petroleum products, which reached 7.5 million barrels per day in 2021 (EC.B./H.).

Of these 7.5 EC.B./U. about half ended up in OECD-Europe markets. In total, by 2021, Russia has produced 10.5 EU.B./U. or 14% of world production, the largest contributor after the US and Saudi Arabia, while exporting 12.8% of world exports of crude oil (4.7 EC.B./U.) and 15% of world exports of petroleum products (2.8 EC.B. /U.). HOUR.). Russia exported more oil than all European countries combined, while meeting 20% ​​of the fuel demand of European OECD countries.

The goal of the US and the EU is to turn the world’s 11th largest economy into an economic pariah.

According to the BP Statistical Review of World Energy, Russia exported a total of 241.3 billion cubic meters of natural gas per year (bcm/eq.) in 2021, representing 19.76% of global natural gas exports, the third best in her history. of which 146.7 DKM/E or 60.8% in total went to the EU. The corresponding percentage in 2008, the year before the great Russo-European crisis, was 81.81% (126.33 DCM/E in the EU against world exports of 154.41 DCM/E), as Russia had not yet started exporting to China ( which began in 2020) and did not export liquefied natural gas (LNG), which has been done systematically since 2010.

The strategy of diversifying markets and especially routes that Russia pursued during the decade leading up to its invasion of Ukraine proved particularly difficult in the case of the FA. New FA conductors or liquefaction plants are built over the years, and before they are built, it must be ensured that the FA is exported through long-term sales contracts, which are becoming increasingly rare. But the same cannot be said for exports, especially for crude oil, where an alternative buyer can be found in a few days, and if the export is carried out by tankers, then it can reach anywhere in the world in a maximum of 30 days. How successful has the aforementioned Russian diversification strategy in the oil sector been? Russia has dominated European oil markets for more than two decades.

This dominance was made possible by the expansion of the Baltic Pipeline System (BPS), which was completed in 2000, allowing Moscow to drastically reduce its transit dependence on the Soviet-built Druzhba pipeline system, thereby achieving a greater degree of global reach. tankers carrying export Russian oil were not owned by the Russian state-owned tanker company Sovcomflot until 2022. Along with the modernization of the BTS and the construction of the Tengiz-Novorossiysk pipeline, Russia built three new oil pipelines to China between 2011 and 2018, even systematically using the Kazakh pipeline network to export oil to Beijing after 2017.

Russia began to reduce its reliance on Western oil markets a decade before its second invasion of Ukraine, accelerating its turn toward Asia after annexing Crimea and parts of the Donbass in 2014, a strategy it has applied with less success in the area of ​​F.A. As a result, between 2011 and 2021, the weight of the European market in total Russian oil exports decreased from 80% to 50%, and by the end of 2022 this share fell below 25%.

It is significant that in 2010 Russia exported more oil to the US than it exported to China. In 2021, China alone accounted for 34% of all Russian exports, compared to 8% in 2010. It is this strategic flexibility, combined with an aggressive policy of lowering oil prices in search of markets, that has made Russian oil extremely popular in Turkey, China and other countries. countries. primarily India, with the latter accounting for 11% of all Russian exports in 2022, compared to less than 1% in 2021.

The shift of Russian exports to Asia and the role of OPEC

Russia lost 57% of its exports to EU markets largely due to its own embargo decisions and the sabotaged loss of the Nord Stream system, unable to make up for these losses by increasing LNG exports or using pipelines to China. After all, it takes many years for Russia to develop these alternative export infrastructures, given the absence of the Trans-Siberian pipeline network, and the Chinese market is supplied by other fields than those supplying Europe. While Russia will build new LNG terminals in the Arctic and possibly a second Power of Siberia pipeline to China, replacing most of its European exports, it won’t be until the end of the current decade, and commercial terms will be worse than those of Gazprom in Europe for about three dozen years.
Ten rounds of European economic sanctions and a Euro-American plan to cap Russian oil export prices even outside the EU are trying to dethrone Russia as an energy superpower, while creating the first ever buyers’ cartel to control the prices and therefore the earnings of the world’s largest exporter. oil and oil products.

How Russia decides to respond to this threat to vital economic security will also shift the geopolitical balance in Asia, strengthening Russia’s strategic partnership with China as well as India, whose oil companies will gradually replace, but on more painful terms for Russia, Western oil. companies, especially in terms of LNG infrastructure.
How OPEC responds to this challenge from the West, which has been exporting 80% of its total exports outside of Europe and North America for decades, will further strengthen the strategic alliance between Russia and Saudi Arabia, with a strong likelihood that Russia will be fully included in the mechanism. OPEC, since Russia is now forever and almost completely excluded from European oil markets.

The almost complete shift of Russian oil exports to Asia will increase the need for more regular coordination between Russia and OPEC, since China, India and the fastest growing countries in the Asia-Pacific region already account for 80% of crude oil exports and to the countries of the OPEC Middle East, but also for Russia ( 75%). And Russia’s possible eventual accession to OPEC will more than compensate for all the losses that the cartel of exporting countries has suffered in terms of its purchasing power as a result of the rise of the United States to the first place in oil-producing states after 2014, thanks to the shale revolution. It is also highly likely that if Russia eventually joins OPEC, it will pull Kazakhstan along, thereby increasing OPEC control from 36% to 52% of global oil supplies by 2021.

This is already taking place at a tactical level through the OPEC+ alliance, which is already systematically fighting through coordinated production cuts with the Euro-American cap mechanism to keep world prices between $80-$100 per barrel in order to prevent major Russian cuts in Asian crude oil sales. , on the one hand, continue to bring significant income to the Russian budget, and on the other hand, continue to bring what in the West we call “super profits” for the OPEC countries, despite the decline in demand from China, which has not yet fully recovered from the draconian anti-pandemic President Xi Jinping’s quarantines.
The full inclusion of Russia and Kazakhstan in the OPEC mechanism will simply make oil more expensive and geopolitically much more unreliable for the West, while the latter – and especially the EU – will try to accelerate its transition to an energy system that will exclude oil from European energy consumption by 2050 .

Even if it turns out to be technologically and economically feasible, the cost of such a transition with Russia’s full membership in OPEC would be much higher, and the impact of the EU’s “degreasing” would be relatively limited for global oil markets, given that in 2021, together with the UK, they accounted for only 12.4% of world oil consumption.

Dr. Theodoros Tsakiris is Associate Professor of Geopolitics and Energy Policy at the University of Nicosia.