By Isaac Cohen*
The meeting of the Group of Seven (G7) advanced economies–Canada, France, Germany, Great Britain, Italy, Japan and the United States–was held over the weekend in the German Bavarian Alps. One of the main topics in the summit agenda was the impact of the war in Eastern Europe on the world’s energy market. The reason is because the conflict involves Russia, the world’s third producer of oil.
As described by energy historian Danel Yergin “A new alignment of world politics is unfolding across the globe that is being drawn with oil and gas and China and India are very much at the center of it.” (The New York Times 06/25/22).
After four months of war in Ukraine, given the sanctions against Russian exports imposed by the G7, China and India together increased their purchases of Russian oil by 2.4 million barrels per day in May, equivalent to half of total Russian crude exports. True, these purchases are made at a discount of 30 percent of the global price, which benefits the purchasers while supporting Russian oil revenues. Also, some of the oil returns to world markets, as refined products imported by some of the countries imposing sanctions against Russia.
This new world energy alignment has also benefitted the companies that produce fossil fuels, because the emergency caused by the conflict in Eastern Europe has sustained higher oil and gas prices, while leading to setting aside some of the international goals on climate change.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.