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Russia To Explore Alternative Energy Markets

The Russia-Ukraine crisis has given Russia a new problem to deal with- the problem of selling energy fuels. With the United States of America completely banning the import of Russian oil and gas, along with the European countries and Japan banning coal exports, the Russian energy export has taken a big hit. Russian energy firms have taken a blow from the sanctions imposed by the west and Europe, now the trade will further be hit by the scrapping of the Nord 2 gas pipeline project between Germany and Russia. With the advent of such a situation, the Russian President has announced that steps will be taken to enhance energy consumption domestically and measures will be taken to spread Russian oil’s reach into new markets to compensate for the loss in the west and Europe.


The initial steps have been kicked off by the Russian government by expanding their outreach into South Asia via India, where they have offered a 35 USD discount per barrel to enhance energy trade. More such steps are in the pipeline as experts say that the present sanctions by European countries are not sustainable as they cannot cut off the energy supply from Russia completely. However, with oil and natural gas making up 45% of the total revenue in the Russian budget concerns about a drop in energy trade is nothing but natural. The Russian president also finds support in the oil and natural gas industries, so any loss here would also not be good for his power chair. Given that minor resolutions are brewing in Russia, any economic, political or strategic drawback would not be a good sign for the regime in power, adding to this the power of Russian oil and gas giants in domestic politics cannot be denied. The recent scrapping of the Nord 2 project has already got the oil and gas industry frowning upon the regime and any further mismanagement of affairs can be detrimental to the Putin led regime.


Apart from sanctions, there are other hurdles and hindrances as well with the energy trade post the war with Ukraine. The international economy is heavily based on the American dollar and due to the decrease in the trade as a consequence of the war-related sanctions, US Dollar inflow into Russia will decrease and lesser cash will be available to make payments. Further, NATO's members have banned SWIFT and tried to isolate Russia from the international banking system which could further be detrimental to the Russian oil trade. There are apprehensions about being sanctioned by the world powers amongst other countries which are willing to trade with Russia, as trading with Russia might invite the wrath of other powerful countries. Hence, it is crucial to keep an eye on the developments in Eastern Europe to make a decision and it would be very interesting to see how the Russian president decides to act to maintain the goodwill of the world energy markets.


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Tags: #russia #energy #oil #OPEC



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