The “financial nuclear weapon” button was pressed, and oil prices shot up again. On February 26, Western powers such as the United States, the European Union, the United Kingdom, and Canada issued a joint statement announcing a ban on several major Russian banks from using the SWIFT international settlement system. Market panic continued to amplify, and market participants began to worry about whether there would be energy sanctions in the future. measure. However, the market has obviously factored in a risk premium for this. After the opening on Monday, international oil prices surged again, with an intraday increase of 7%. However, due to the lack of specific impact assessment, oil prices fell back after the surge.
According to Xinhua News Agency, an anonymous senior US government official said that the relevant sanctions target 10 of Russia’s largest financial institutions, whose assets account for nearly 80% of the total assets of the Russian banking industry. Relevant banks will not be able to conduct transactions with overseas banks through the SWIFT system, aiming to set up obstacles to Russia’s foreign trade, foreign investment and remittances. This time, the West’s sanctions did not completely block Russian banking institutions, but left a lot of room for their own interests. Amos Hochstein, senior adviser for energy security at the U.S. State Department, said that U.S. sanctions will not target the Russian oil and natural gas industry because such measures will not only be difficult to reduce Russian oil and natural gas revenue, but will instead impose energy prices on the United States and its allies. Consequences of rising prices. From this perspective, the situation does not seem to be as serious as everyone fears.
“Sanctions against the SWIFT system will deal a heavy blow to the Russian economy, cause huge troubles in Russian energy trade settlement, and thus have a greater impact on Russian energy exports. However, for European countries that are highly dependent on Russian energy, the SWIFT ban is Called a ‘financial nuclear weapon’, it not only punishes Russia, but its effect of ‘killing one thousand enemies and damaging one’s own eight hundred’ will also harm the interests of energy consuming countries such as the United States and Europe. Therefore, it is not clear yet that the West The specific scope of the country’s sanctions on the Russian banking industry. According to foreign media reports, this sanction does not completely kick Russia out of SWIFT, but only selectively prohibits Russian banks from using the SWIFT system. The EU’s payment channels for purchasing Russian natural gas remain open. Countries The specific approach has not yet been finalized, or some energy-focused banks will be excluded from the restriction, or product definitions within the SWIFT system will be used to allow energy-related transactions to continue.” Yang, head of Haitong Futures Energy Research Center An said that at present, the specific impact on Russia’s energy output still needs to be implemented after relevant sanctions are implemented before a clear judgment can be made.
According to Zhong Meiyan, director of energy and chemical industry at Everbright Futures Research Institute, after the SWIFT sanctions were imposed on Russia, several major Russian banks, including Savings Bank, Bank of Foreign Trade, Bank of Foreign Economics, and Alfa Bank, can no longer use U.S. dollars for financial settlements. However, Gazprombank is currently not on the sanctions list. This bank is the main settlement bank for Russian natural gas exports to Europe. It can be seen that the current sanctions are still exempted in energy trade, so the current sanctions have not yet affected Russia’s oil and gas exports. Influence. However, Zhong Meiyan said that the geopolitical situation remains unresolved, and the market is worried about the possibility of further escalation of war and sanctions.
Obviously, wars and sanctions have caused huge uncertainty in Russia’s crude oil export prospects. Yang An introduced that due to the war, the Russian crude oil shipping market is basically in a wait-and-see situation. There are also many Russian oil and bulk commodity trades. Traders said they expected massive export disruptions starting Monday due to new sanctions banning Russia from using SWIFT.
Russia is the world’s second largest crude oil producer and exporter of crude oil and refined oil products. In 2021, Russia’s crude oil production was 10.8 million barrels per day, about 45% of which was used for direct export, most of which was sold to Europe. “This time, the United States and most European countries have participated in sanctions against Russia. In theory, it will have a major impact on the global crude oil trade pattern. It will have an impact on Russia’s crude oil exports in the short term at least within one month. Buyers will turn to other countries such as the Middle East. Regional oil-producing countries are seeking resources, and it will take time to understand the specific impact of specific sanctions on Russia’s energy exports in the medium and long term,” Yang An said.
Zhong Meiyan said that the current export of Russian crude oil has not been cut off, but the natural gas supply from Russia to Europe is restricted by “Beixi 2”. Europe itself is experiencing the pain of further “energy crisis”, and from the perspective of Russia, Europe and the United States Buyers will reduce their energy purchases from Russia and replace them with oil and gas from other places, such as the United States and some countries in the Middle East. They are also stepping up their supply of liquefied natural gas to Europe.
However, news came out on February 28 that the United States stated that it would not rule out the possibility of restricting U.S. purchases of Russian oil and natural gas. In addition, Canada will ban the import of Russian crude oil.
The main driving force for the current rise in oil prices is the geo-risk premium, and the direction of this factor is highly uncertain. The United States and the European Union have announced that Russia will be excluded from the SWIFT system, and Russia has raised its strategic weapons to a state of special combat readiness. This It makes the market feel very uneasy and the situation continues to escalate, which will make the market continue to inject higher risk premiums into oil prices.
Yang An believes that although the oil price in the current market has risen to US$140/��Even higher target outlook, but once the oil price pushed up by geopolitical factors reverses, it is often an extreme market with an inverted “V”. Considering the uncertainty of the direction of the war, it is recommended to be cautious about long opportunities in this geopolitical background. choose.
The reporter learned that oil prices broke through the US$100/barrel mark twice in 2008 and 2011, with the highs reaching US$147/barrel and US$128/barrel respectively. In particular, in 2011, the oil price remained at 100 US dollars/barrel due to the influence of geopolitical factors. The high level of US$90-130/barrel has been oscillating for a year.
According to Zhong Meiyan, from March 2008 to July 11, 2008, oil prices rose to a maximum of 147 US dollars per barrel. The factors behind this wave of prices were the spread of the subprime mortgage crisis. The five major central banks including the Federal Reserve jointly announced a bailout and sharply cut interest rates. , injecting a large amount of liquidity into the market, causing flooding at the macro-financial level. At the same time, from the supply side, OPEC’s contribution to production is limited. Both the financial and supply sides have worked together to push up oil prices. Subsequently, starting from September 2008, the global financial crisis continued to ferment, and oil prices began to fall below US$100/barrel in September, falling to a low of US$36/barrel in December.
On January 31, 2011, oil prices once again exceeded 100 US dollars per barrel. The background of this round of oil price rise was the European debt crisis in 2011. In fact, it also corresponded to easing, and then the Federal Reserve also had QE. Another most important factor is the democratization movement of the “Arab Spring” that started in Tunisia in December 2010 and swept across North Africa and West Asia. Africa and West Asia are important contributors to crude oil production, and the uncertainty on the supply side is An important factor that helped push oil prices above $100/barrel.
“On February 24, 2022, the conflict between Russia and Ukraine escalated into a war. At present, it seems that the conflict between Russia and Ukraine is unlikely to be alleviated in the short term. As this incident continues to unfold, the risk factors for oil prices have not been eliminated, and the risk premium will continue to Improve.” Zhong Meiyan said.
So, what impact will rising international oil prices have on downstream industries? In this regard, Yang An said that excessively high crude oil prices have put pressure on the downstream refining and processing industry, especially after the crude oil price reached 90 US dollars per barrel. Although refined oil, chemicals, etc. passively followed the rise, many downstream products including It is difficult for diesel, asphalt, chemicals, etc. to keep up with the increase in crude oil, and the profits of oil refining and processing are constantly being squeezed. This situation will suppress the demand for crude oil.
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