Tuesday, March 08, 2022

Biden bans oil imports from Russia - does that hurt Russia? The US?

 OK, so here is one scenario. I think most other likely scenarios have similar outcomes.

Suppose oil is at $120 a barrel and we stop importing one million barrels of oil from Russia. Biden calls Maduro in Venezuela and says he wants to buy one million barrels of oil. Maduro calls Putin and negotiates a purchase of one million barrels of oil at $125 per barrel. That price reflects Putin's guess that it is going to the US. Maduro then calls Biden and negotiates a sale of one million barrels of oil at $130 per barrel. Putin gains, Maduro gains, the US loses.

No comments: