Petrodictatorships like Venezuela and Saudi Arabia gain strength with war in Ukraine; understand

With less Russian oil on the market and an embargo on the product due to start on Monday, the 5th, authoritarian oil-producing governments are warmly received by dependent countries. the government of Venezuela insisted on sharing an image of the COP-27 on what Nicolas Maduro is warmly received by the French president, Emmanuel Macron🇧🇷 The gesture drew attention because, in 2019, the France rejected Maduro and recognized Juan Guaidó as leader of Venezuela. Now, in the midst of an energy crisis that threatens Europe because war in ukrainefriendly gestures towards authoritarian leaders such as Maduro and the prince Mohammed Bin Salman gives Saudi Arabia have become frequent. For analysts, the Petroleum is the explanation.

On Monday, 5, Ukraine’s allies will take the first step to embargo Russia’s oil in retaliation for the invasion of the country. The sanction promises to increase the impact on the energy sector worldwide, as Moscow is a major exporter of oil. In search of alternatives to avoid an energy and economic collapse, the West turns to the so-called petrodictatorships – Authoritarian states holding large oil reserves – even after having promised to turn them into pariahs.

In the most recent move, the government of Joe Biden eased sanctions against Venezuela by grant authorization for US energy giant Chevron to operate jointly with PDVSA, albeit with caveats. A measure that was celebrated by Nicolás Maduro and criticized by republicans.

Venezuelan President Nicolás Maduro attended COP-27, where he met with Emmanuel Macron and John Kerry of the US
Venezuelan President Nicolás Maduro attended COP-27, where he met with Emmanuel Macron and John Kerry of the US Photograph: Mohammed Salem/Reuters

“It is not necessarily a revival of petro-states with authoritarian governments per se, it is that Western countries have decided that their secular state interests will take priority over any concerns at this time as all focus is on Russia and Eastern Europe,” explains Justin Dargin, energy expert at Middle East at the Carnegie Endowment for International Peace think tank, in an interview with Estadão🇧🇷

“This is not a new phenomenon: Western countries, throughout the 20th century, ignored certain authoritarian tendencies of their partners if political convenience required it, such as the American negotiations with many governments in Latin America, Africa and the Middle East”, he adds. .

You United States deny that the recent rapprochement with Venezuela is a result of the energy crisis, but rather a reflection of “the long-term US policy aimed at lifting sanctions subject to concrete progress that will lessen the suffering of the Venezuelan people and allow support for the return of democracy to Venezuela,” commented the Treasury Department. The partial authorization took place last Saturday, after the government and opposition in Venezuela made progress in their negotiations in Mexico.

“All this rapprochement with Venezuela actually came from earlier times, but it was accelerated in the context of the war between Russia and Ukraine”, says FGV professor of International Relations Vinicius Vieira. “The US wants to keep oil prices at at least reasonable levels to maintain stability in the market, which is essential both for geopolitical purposes and for domestic policy itself due to the US dependence on oil, including for transportation”.

“Historically, whenever there is a greater demand for oil and this demand can only be satisfied by the supply of autocratic countries, these countries end up having greater bargaining power. So, everything that we have seen from Venezuela in recent years, the issue of having an alternative government, the recognition of Guaidó, all of that really tends to stay in the past and gives survival to the Maduro regime”, he completes.

Saudi Crown Prince Mohammed bin Salman welcomes US President Joe Biden at Al Salman Palace upon his arrival in Jeddah, Saudi Arabia, July 2022
Saudi Crown Prince Mohammed bin Salman welcomes US President Joe Biden at Al Salman Palace upon his arrival in Jeddah, Saudi Arabia, July 2022 Photograph: Bandar Algaloud/Kingdom of Saudi Arabia via Reuters

In addition to being the largest supplier of natural gas to Europe – which has had its taps turned off almost completely in recent months – Russia is the largest supplier of crude oil to the continent🇧🇷 The commodity represents two thirds of the European Union’s energy imports, followed by gas (27%). In 2021, nearly three-quarters of the bloc’s crude oil imports came from Russia (25.9%), Norway (9.1%), the US (8.4%) and others, according to European Commission data.

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“In 2020 and 2021, the EU was mainly dependent on Russia for imports of crude oil, natural gas and solid fossil fuels, followed by Norway for crude oil and natural gas,” the commission states in its annual report. The bloc has sought to reduce its energy dependency on imports, but its dependency rate is still close to 60%, even approaching 100% in some countries🇧🇷

In the second quarter of 2022, after the start of the war in Ukraine, imports of Russian oil were 16.7%, a reduction of 8.3 percentage points from the same period of 2021. The bloc then turns to other partners, with increase in imports from the United States, Angola, Saudi Arabia, Brazil and the United Kingdom. But still a long way from making up for the Russian loss.

The United States is less dependent on Russian oil, relying more on imports of crude oil from Canada, Mexico and Saudi Arabia, as well as some countries in Latin America and Africa. The country managed to increase its domestic oil production by using a controversial extraction technique called fracking, but it is still far from being self-sufficient.

According to data from the Energy Information Administration, only 7.9% of the crude oil imported by the country came from Russia, while in Canada this number reaches 50%. But a rise in fuel prices – which adds to galloping inflation and an unpopular president – forced the country to place its oil reserves on the market and to seek alternatives.

Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman during the G20 summit in Buenos Aires, Argentina on November 30, 2018
Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman during the G20 summit in Buenos Aires, Argentina on November 30, 2018

After having promised, when he was still a presidential candidate, to make the crown prince of Saudi Arabia an outcast for his involvement in the murder of the journalist Jamal Khashoggi🇧🇷 Biden was forced to lower his tone against energy partner who, so far, is dictating the course of relations between the two nations.

“Russia itself served for a good period as a balance to the power of the oil cartel, so much so that it became part of OPEC meetings, with Saudi Arabia leading the group and bargaining with Russia”, explains Vinicius Vieira. “Now that Russia seems to be out of that market, at least for the West, there is an empowerment, especially of Saudi Arabia, but also of Venezuela, which was off the American radar.”

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In theory, this Monday, the great European embargo on Russian oil begins🇧🇷 Banning oil altogether from Moscow was an unfeasible option, both because of energy dependency and the risk of a global economic downturn if that entire amount is taken off the market.

The alternative found by the European Union, together with the G-7 and Australia, was to prohibit the maritime transport of the product to Europe – only by sea, freeing Hungary to receive via pipeline – in addition to imposing a ceiling of US$ 60 (R $313) for banks, insurance companies and shipping companies to work with Russian oil.

The intention is to reduce Russia’s profit, which has flown into the war, without so abruptly affecting the global market. But setting a ceiling is still a cause for friction between countries, in addition to causing skepticism in experts about its effectiveness, as Moscow has already moved ahead in negotiating its product with China and India🇧🇷

Greenpeace activists hold a banner near the oil tanker Minerva Virgo docked at the oil terminal in Bayonne, New Jersey, USA on March 22, 2022
Greenpeace activists hold a banner near the oil tanker Minerva Virgo docked at the oil terminal in Bayonne, New Jersey, USA on March 22, 2022 Photograph: Bjoern Kils/Reuters

Furthermore, a decision by the OPEC+ (group of oil producing countries, led by Saudi Arabia, and with the presence of Russia) of decreasing its oil production has infuriated the Westtherefore, by reducing supply when there is high demand, the price of oil will skyrocket, which tends to directly benefit Vladimir Putin🇧🇷

OPEC+ members deny their action is to benefit Russia, but the decision left the relationship between the United States and Saudi Arabia even more shaken, with Joe Biden needing to dialogue with the crown prince who promised to turn into a pariah🇧🇷

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The big question is how much these petrodictatorships will actually be able to supply the global demands for the product. Although the countries of the Persian Gulf are known to have immense production of oil – the engine of their economy – there is little transparency about the available volumes and their ability to increase production. Venezuela, on the other hand, has dense oil that is difficult to refine, and its oil industry is a shadow of what it was in the 1990s.but it can help, at least temporarily, the US to keep its reserves supplied.

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