The global market is grappling with the shortage of oil as Iran choked the supply through the Strait of Hormuz. Shipping traffic has dropped almost 95% in the first week of March, making prices rise. On the heels of the blockade, the Vice President of Oil Markets at Rystad Energy consulting, Janiv Shah said that the West is considering buying Russian Crude to ease the demand.
His statement comes after the US Treasury Department issued a license to India allowing it to procure Russian oil loaded on tankers at sea within 30 days. The decision was made to ease the growing pressure on the market and keep the supply chain intact. This is a U-turn from the US-India trade deal, where the White House demanded India stop buying Russian oil.
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West Mulling To Buy Russian Oil, Says Janiv Shah
The blockade of the passage is making the West mull buying Russian oil, said Shah. “The market is currently grappling with physical supply being choked off by drone strikes, while Middle Eastern producers are simultaneously hitting a critical point where they must shut in production simply because there is nowhere left to put the oil.”
He added that the Russian supply is now the only choice to keep the economy afloat. Shah said that the West could begin producing oil routed from India and other countries. “Russian supply remains the ultimate wildcard in this equation; as prices climb, the incentive to reroute that crude through alternative channels like India becomes impossible for the West to ignore, as evidenced by the recent 30-day US waiver,” the expert added.
If the West begins to buy Russian oil from other channels, it would be a reversal of the previous policies. However, no country in the West has publicly made an announcement on this matter.