RIYADH: Successive sanctions by the US and EU-led Western allies on Russia could slightly reduce Saudi Arabia’s oil exports to India and China, as the Asian giants will buy more Russian oil at a lower price, a report has suggested.
The analysis released by the King Abdullah Petroleum Studies and Research Center noted that the gross domestic product of India and China would benefit due to discounted oil imports.
The report on the effects of Russian sanctions on the global economy further added that sanctions on Russian energy exports would only have a minimal impact on the global GDP.
“One immediate implication of the sudden and unexpected global shift in crude oil supplies for Saudi Arabia is a short-term loss in market shares in India and China,” the KAPSARC report said.
It added: “This is reflected in a small -0.1 percent to -0.2 percent reduction in Saudi GDP relative to the growth the Kingdom would have experienced had the shock to Russian oil production not occurred.”
Meanwhile, in a recent report, Nikkei Asia revealed that Russian fossil fuel exports to China and India had risen significantly since Moscow’s invasion of Ukraine.
According to the report, the value of Russia’s energy exports to China increased by 17 percent between the July-August period compared with February and March, while exports to India increased by 5.7 percent.
KAPSARC, in its report, also added that oil prices are expected to rise 5 percent per annum from their baseline equilibrium in the next two years due to the sanctions on Russian energy exports.
Last week, in another report, the think tank said that effective Western sanctions on Russian could make the global oil market tighter, as picking viable alternatives to replace Russian energy exports seem difficult.
The report, written by KAPSARC research fellow Colin Ward, noted that US and Canada have successfully swapped imports as these nations were independent of Russian imports in the past. At the same time, European countries faced challenges, as they have depended on Russian energy for several years.