By Denis Korkodinov
Due the regional tensions in the Middle East (the US-Iran confrontation, the war in Yemen), the Saudis’ assurances that Moscow can count on an unimpeded supply of oil are fantastic. Saudi Arabia could not guarantee uninterrupted oil supplies. An oil transit contract between Moscow and Riyadh could be put in jeopardy.
The problem stems from the fact that in the case of the blockade of the Strait of Hormuz from Iran, Aramco is unlikely to be able to carry out the flow of crude oil and oil products to the world market in the previous volumes.
And although Riyadh has the ability to export daily up to 5 million barrels, this is not enough to secure all of its commercial obligations to international partners, including Russia. It is worth noting that at present the throughput of the Strait of Hormuz is approximately 20 million barrels a day.
However, if the US-Iran conflict escalates, not only Saudi Arabia, but also the United Arab Emirates, Kuwait, Qatar, Bahrain, Iraq and Iran will be faced with the need to search for new oil routes. In this case, in the event of a blockade of the strait or a direct military conflict, there is a risk of the collapse of all the system of maritime trade.
Moscow’s hopes that the Saudis will be able to provide oil supplies through their pipelines are completely unrealistic, as they are able to supply less than 10 million barrels daily, which will not cover even the rolls from the volumes that could be supplied through the Strait of Hormuz.
The most interesting thing is that in the case of a real blockade of Ormuz, the vast majority of oil tankers belonging to Saudi Arabia will not be physically able to redirect to other routes and will simply be paralyzed, which, incidentally, will affect not only the transit of oil, but also other goods supplied by the Saudis for export.
Representatives of Aramco, trying to reassure their international partners that the oil routes are completely safe, probably either underestimate the capabilities of Iran, or knowingly lying. In the event of a military conflict, oil routes will become the main targets of the enemy.
In addition, even an amateur can determine from a geographical map that virtually all of the oil assets of not only Saudi Arabia, but also of the entire Arab world are within the range of Iranian ballistic missiles. Therefore, any military provocation against Tehran is fraught with negative consequences of a global scale.
Moscow, which has concluded an oil deal with Riyadh, must be ready for sharp fluctuations in the price of “black gold” in any development of the American-Iranian conflict. And this is the most positive outlook. The most terrible thing can happen when Saudi Arabia does not physically sit on supplying crude oil and petroleum products, thereby putting Russia in an extremely difficult position.
(The opinions expressed in this article are solely those of the author and do not necessarily reflect the views of World Geostrategic Insights).
Image Credit: oilprice.com