The biggest impact of the Ukraine crisis is expected to be on the supply of petroleum. This is because Russia is one of the largest oil producing countries in the world. It produces about 11 million barrels of crude oil daily. However, it uses half of it itself. It exports about 50 to 60 lakh barrels daily.
The US is currently the largest producer of oil in the world. Russia is at number two. Saudi Arabia ranks third. The special thing with Russia is that it exports the most to European countries. About half of the total exports, ie 2.5 million barrels, it exports to Europe every day. These include Germany, Italy, Netherlands, Poland, Finland, Greece etc.
About a third of Russia’s exports to Europe are routed through the Duruzba pipeline, which passes through Belarus. Given the increasing sanctions on Russia, this supply of 700,000 barrels per day can be targeted. Payment for this supply may be stopped or its supply may be stopped at the Belarus border.
In 2019, European countries suspended the delivery of gas from the Duruzba pipeline for several months. The reason for this was the danger of organic chloride mixing with the crude oil in the pipeline then. Due to this, refineries in Europe could be harmed.
The rest of the oil delivery from Russia to Europe is by ship. Ships deliver oil to many ports in Europe. China is the second largest country to buy oil from Russia. It buys 16 barrels of crude oil daily from Russia. Half of this goes to China via a special direct pipeline, the Eastern Serbia Pacific Ocean Pipeline.
The sanctions on Russia will have a big impact on its economy. The reason for this is that oil exports are a major contributor to Russia’s economy. Last year, Russia earned $110 billion from oil exports. This is twice as much as Russia’s earnings from natural gas exports.
From now on, the effect of sanctions on Russia’s oil industry is beginning to be visible. Fearing further sanctions on Russia, European countries have stopped taking deliveries by spot cargo. Here, India has struck a great deal with Russia at a great discount. Earlier, both the countries had to face similar difficulties after the sanctions on Venezuela and Iran.
,