Energy The threat of war in Ukraine raises the price of oil, and Russia benefits from it

Oil is by far Russia’s most important export. Due to the rise in prices, the country’s buffer fund continues to expand.

Russian The threat of war in Ukraine has raised the price of oil, benefiting at least one country, Russia. The price of oil has risen sharply in recent months, and in addition to easing the coronary virus pandemic, the main reason for this is the fear of supply disruptions caused by the crisis in Ukraine.

In recent days, the price of a barrel of oil has hit the $ 100 mark. A barrel is a measure used in the oil market, equivalent to 159 liters. The last time the world market price of oil was so high was in 2014.

On Thursday, the price of North Sea Brent crude oil hovered around $ 93. Even before Christmas, Brent paid $ 71 a barrel. The price has risen 30 percent in two months. Similarly, Russian Urals grade has risen in price, costing about $ 93 a barrel on Thursday.

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The price the rise will strengthen Russia’s public finances.

Russia is one of the world’s largest oil-producing countries. It exports about 6.5 million barrels of oil a day to the rest of the world. About half of the oil consumed by EU countries comes from Russia. In Finland, the share is about 80 percent.

The country’s economy relies heavily on fossil export revenues. Half of the country’s total export revenue comes from fossil fuels, of which oil is the most important. Fossil exports account for about a third of government revenue.

As oil prices rise, Russia will be able to further strengthen its oil fund, which is already at a record high. Russia invests part of its fossil export revenues in the National Welfare Fund, which at the beginning of the year was more than 150 billion euros, almost 12 percent of Russia’s gross domestic product.

The purpose of the oil fund is to protect the country’s public finances from oil price fluctuations, but some experts believe that this is also an economic buffer that will allow the president to Vladimir Putin able to pursue its geopolitical goals.

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Read more: In silence, stuttering Russia has amassed a coffers with which it will endure the crisis

The crisis in Ukraine has tightened tensions between Russia and the West since 2014. The United States fears Russia is preparing to invade Ukraine, and to prevent possible use of force, the West has prepared economic sanctions on Russia. Their contents are not known exactly, but Western countries have threatened to make sanctions very painful for the Russian economy.

There has been speculation in the public about sanctions on financial markets that could even disrupt Russia’s oil trade. Military action could also disrupt oil supplies, as Russia exports oil to Eastern Europe through Ukraine.

Senior geopolitical advisor to market analysis firm Platts Paul Sheldon says Putin ‘s unpredictability is fueling market uncertainty.

“In any case, we do not expect oil exports to decrease significantly as a result of U.S. sanctions or Russia’s own decisions,” Sheldon writes in his review.

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Oil the price has passed over the last two years on a roller coaster.

The price plummeted in the spring of 2020, when a coronary virus pandemic halted tourism and commuting and collapsed oil demand. At the time, Brent crude cost about $ 20 a barrel. In the United States, a situation with the price of WTI crude oil was even seen momentarily fell negativebut this price collapse was also affected by the local inventory situation.

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