March 20, 2025 [Oil Price]- The price of Russia’s oil blend in rubles so far in March is clocking in 24% below the level targeted in the federal budget for 2025 due to a stronger ruble and weaker global oil prices. The rouble has strengthened in the current year amid hopes of a settlement to the conflict in Ukraine. The ruble has appreciated in value from a multi-year low of 113.75 rubles per $1 in December 2024 to $83.92 rubles currently.
A ceasefire to the Russia-Ukraine war could be bearish for oil prices if Trump pushes for the removal of sanctions on the Russian energy industry, Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Geopolitical stability may also “largely extinguish the still simmering ‘fear bid’ in the oil market.” Sanctions by the Biden administration roughly tripled the number of directly sanctioned Russian crude oil tankers, enough to affect around 900,000 barrels per day (bpd). Whereas it’s highly likely that Russia will try to circumvent the sanctions by employing even more shadow fleet tankers and ship-to-ship transfers, StanChart sees 500,000 bpd of displacements over the next six months.
Meanwhile, the EU has floated the idea of resuming purchases of Russian pipeline gas as part of a potential settlement of the Russia-Ukraine war. Backed by Hungarian and German officials, the proposal argues that the move could give both Russia and Europe incentives to maintain a peace deal while stabilizing the continent’s energy market. Europe has cut Russian gas imports dramatically, with imports of Russian gas declining from about 450 million cubic meters per day (mcm/d) at the end of 2021 to about 150 mcm/d currently. There were plenty of discussions on the subject during the latest London’s International Energy (IE) week. The Financial Times has reported about a plan by the former head of Nord Stream 2’s parent company to start up Nord Stream 2 with U.S. businesses buying the pipeline so as to act as middlemen between Russia and European consumers in the hope that would make flows seem more reliable. However, StanChart has pointed out that such a plan would need approvals from multiple jurisdictions, with the injection of U.S. interests not necessarily improving the reliability and supply security of Russian flows.
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