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Vitol: Oil Prices Don’t Reflect Risk of Disruptions to Russian Exports

Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February. It sunk 13% last week to around $104. (Reuters)
Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February. It sunk 13% last week to around $104. (Reuters)
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Vitol: Oil Prices Don’t Reflect Risk of Disruptions to Russian Exports

Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February. It sunk 13% last week to around $104. (Reuters)
Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February. It sunk 13% last week to around $104. (Reuters)

Oil prices have fallen to levels that don’t reflect the risk of disruptions to Russian exports or the ability of China to keep the coronavirus pandemic under control, according to the world’s biggest independent crude trader.

While Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February, it sunk 13% last week to around $104.

That was due to the United States announcing an unprecedented release of strategic reserves to tame fuel prices and virus cases rising in China.

“Oil feels cheaper than most would’ve predicted,” Mike Muller, Vitol Group’s head of Asia, said Sunday.

“Oil prices could be higher given the risk of disruption of supplies from Russia. But people are still lost figuring out those numbers.”

Muller noted that flows of Russian crude and oil products may be down by between one and three million barrels a day through the third quarter. The country normally exports around 7.5 million barrels every day.

In this context, the International Energy Agency followed suit and agreed on April 1 to a second emergency release of oil reserves in response to “market turmoil” caused by Russia's invasion of Ukraine, without specifying volumes.

The announcement showed IEA member states’ “strong and unified commitment to stabilizing global energy markets,” the Paris-based group of 31 industrialized nations but not Russia said in a statement following an emergency meeting.

The agreement follows the previous action taken by IEA member states, announced last month, to which they pledged a total of 62.7 million barrels. They hold emergency stockpiles of 1.5 billion barrels.

The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock, the agency warned.

It pointed out that Russia’s war in Ukraine continues to put significant strains on global oil markets, resulting in heightened price volatility.

Its governing board recommended that governments and consumers maintain and intensify conservation efforts and energy savings.

Russia’s oil and gas condensate production fell to 11.01 million barrels per day (bpd) in March, from an average output of 11.08 bpd in February, two industry sources familiar with the data told Reuters on Friday.

On March 31, the output was down to 10.6 million bpd, the lowest daily level since September 2021, the sources said and Refinitiv Eikon data showed.

Fall in Russia’s oil output happens along with disruptions with the state’s oil and product exports as European costumers turned cautious of trading with the state due to Western sanctions.

Russian oil output is falling in time when OPEC+ deal offers the state to rise its output monthly.

Urals oil loading from Russia’s Baltic ports fell five percent behind the schedule for March due to cargoes cancellations.

India stepped up as one of major buyers of Russian oil after Western sanctions were imposed.

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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
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IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.

Business

Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
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Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.

Business

Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
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Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.