Asia will become the ‘default market’ for Russian oil, Dan Yergin says

Dan Yergin, vice chairman of S&P Global, said that Asia will become the default market for Russian oil as the country tries to find buyers for its energy exports.

The price of oil in Asia has gone up since Russia invaded Ukraine. Both Beijing and New Delhi have close ties with Moscow.

It looks like Asia would be the default market for barrels of Russian oil that would have gone to Europe.

The U.S. banned Russian crude, the U.K. planned to do the same and the European Union was considering similar measures.

There's a lot of self sanctioning going on that people aren't picking up oil, banks aren't giving letters of credit, and people aren't showing up.

I would have said five weeks ago Russia’s an energy superpower ... I think it’s still going to be an important player. But it’s going to be a reduced energy power compared to where it was before.

Russia has excess crude that is difficult to sell and that situation is likely to get worse, analysts said. According to the International Energy Agency, Russia is the world's largest exporter of oil to global markets and the second largest crude oil exporter behind Saudi Arabia.

I would have said five weeks ago that Russia is an energy superpower. It is still going to be an important player. It will be a reduced energy power compared to where it was before.

Russian crude is being sold at record discounts according to the IEA. According to analysts, a couple of commodity trading firms recently offered discounts of $30 and $25 per barrel for the Urals blend.

Energy exports from other countries have spiked to levels not seen in over a decade. Oil prices have been volatile since the war began and are 80% higher than they were a year ago.

As oil prices soar, India gets its crude from a number of countries, including Iraq, Saudi Arabia, the United Arab Emirates and Nigeria.

According to industry observers, there has been a significant rise in Russian oil deliveries to India since the Russia-Ukraine war began, and New Delhi looks set to buy even more cheap oil from Moscow.

India imports 85% of its oil, so it is a real shock for the Indian economy when oil prices go up.

India is talking to Russia about buying oil at a considerable discount, but it is a complicated logistical system that moves 100 million barrels a day of oil around the world.

Dan Yergin is now the vice chairman of S&P Global.