Interesting relationship between International Oil Price and Russia’s invasion Russia invaded Ukraine on February 24th, 2022, which shocked the world. There were many concerns about this incident, and one of the fields that got influenced by it is the international oil price. Russia is one of the large oil-exporting countries, and their invasion caused the global markets to avoid Russian oil. Since the international oil price reached over 100 dollars per barrel, traders were betting on more increases.
However, unlike the warnings that strained the world, the international oil price has decreased to under 100 dollars (based on March 13th). There are many possible reasons for this; Covid-19 restraining people’s activities can decrease the demand, and Iran’s nuclear negotiation can cause a decrease. Therefore, some predicted that the international oil price will settle down since there are quite many variables that can cause a decrease in it.
While most countries are avoiding Russian oil due to this invasion, China made a contract with Gazprom (a Russian State-run natural gas company) and opposed the Russian oil sanction. The part that people need to concentrate on is that the proportion of yuan payments of trade between China and Russia has risen from 3 percent (2014) to 17 percent (2020) and seems to rise again with this contract. This is because Russia has been excluded from SWIFT (Society for Worldwide Interbank Financial Telecommunication) which increases the probability of this contract between China and Russia using CPIS (Cross-border Interbank Payment System). Since this situation can promote the yuan to threaten the dollar which is the current international currency, the US has started to check.
Work Cited
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Bloomberg Professional Services, Korea. “오늘의 5가지 이슈: 유가 3월 200불? BEI 신기록 – Bloomberg Professional Services – Korea.” Bloomberg Professional Services | Korea, 7 Mar. 2022, www.bloomberg.co.kr/blog/five-oil-price-surge-bei.
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By. Sonbom Lee