Why Saudi Arabia is buying Russian oil

American Thinker ^ | 26 Jul, 2022 | Thomas Lifson

[MtnClimber]

If ever there were a situation that would seem to parallel the old saying that something is like sending “coal to Newcastle” – meaning doing something that is pointless – it would be sending oil to Saudi Arabia. Yet, there is a reason that the number two oil producer in the world is importing significant and increasing amounts of oil from Russia. And it illustrates the pointlessness and counterproductivity of the sanctions on Russian oil sales spearheaded by the Biden administration that have helped send the price of crude oil soaring.

Oil is sold on a global market. Restricting sales via refusing to buy oil from one producer like Russia does not mean that the Russian oil stays in the ground or accumulates in storage facilities. It just means that the Russian oil will find other buyers who will pay a little less than Russia would have gotten without the sanctions.

But the discount comes off of the higher prices set on the world market as the countries imposing sanctions have to turn elsewhere to bid for oil supplies. They have to pay more, and the world market price for oil goes up. Joe Biden likes to call out the “Putin Price hike,” and this is what he means.

Meanwhile, Saudi Arabia is buying the Russian oil at a discount from the higher world prices caused by imposing the sanctions (and the Biden administration’s limits on oil exploration, production and transport in the United States, but that’s a separate issue).

SNIP

Saudi Arabia is able to sell the oil it used to use for electricity generation on the world oil market and reap much higher prices than it pays to Russia, and much higher prices than it used to receive before the sanctions were imposed.

[hinckley buzzard]

With the western world hell bent on cultural/political/economic suicide, Saudi and a few other major players would be likely to see the future belonging to BRIC.