The return of Russian primary goods to global markets is not a matter of possibility, but rather the timing and conditions that will be subject to it. Despite the approach of this moment, the lifting of the sanctions imposed by the West and the return of trade to normal levels will not lead to a reduction in prices as at first glance. With the commencement of the United States and Russia negotiations on the war of Ukraine, two different market opinions prevail; The first is that the negotiations will be long and painful, and accordingly the sanctions will remain valid for months and maybe years; The second is that the appearance of a breakthrough in it is threatening. I think the second opinion. The most important aspect is also not the fines, but its application. After what happened last week, someone really thinks that the US Treasury, for example, will give preference to the monitoring of Russian oil antibiotics? Or that US diplomats are pushing the Asian countries to avoid Russian primary goods? Or that the White House does not look forward to the return of US oil companies to Russia? The criminal system is fully collapsed, although legally. Russia’s production of goods was not affected by the sanctions, the issue was loaded with major risks. Russia is a great power in basic merchandise, and it is classified among the five largest countries producing in many markets, such as oil, aluminum and wheat, as it is an important source for neighboring countries. Before the Ukraine invaded 2022, the supplies stopped, Russia provided Europe 25% of oil needs, 50% coal and about 40% of the gas. The war led to a fundamental change in the path of trade, but there was no change in Russia’s production of primary commodities, but in some cases more than 2021. This was somewhat intended, as the United States, the United Kingdom and the European Union had a difficult choice; Either the ban on Russian primary goods and a tremendous increase in inflation, or allows the continuation of the trade, which means that Russia’s financing is in its war against Ukraine. But rather they chose an impossible third road; Fines, but with sufficient gaps to ensure continued offer. The return of Russian goods does not mean lower prices for it; Removal of sanctions may not lead to low prices, at least in the short term. Let our oil take an example, because the restrictions on Russia’s oil production are not caused by Western sanctions, but rather by state decisions as a member of the “OPEC+” coalition. It is true that the production of Russian oil decreased from its level in the late 2021, with approximately 9.7 million barrels per day compared to 10.6 million barrels, but the production of the large countries in “OPEC+”, such as Saudi Arabia, has decreased in the same way, if not by a larger size. Agricultural commodities are another example of a sector that will not be affected in the primary commodity market, despite the obstacles caused by sanctions on banks and banking, Russia was able to export most of its crops as it wished. In fact, wheat exports during the 2023 and 2024 season reached the highest level ever at 55 million tonnes, representing an increase of 60% from the 2021 and 2022 season, and the metal sector was a similar increase, while the production of Russian aluminum rose to 3.8 million tonnes last year, which is the highest level in more than a decade. Natural gas forms the only exception, as the restrictions on gas by Russia itself, not Western countries, have been imposed; In general, Moscow was the one who stopped selling gas to Europe. Europe remains a purchased from anywhere where the initial commodity is still available, such as liquid gas. In fact, a number of European countries buy Russian liquid gas in unprecedented quantities, after more than 1000 days have passed since the start of the invasion. Although I do not expect the purchases of Europe from Russian gas to the previous levels, it is certain that the resumption of flow, even if limited to a small number of countries, will have a significant impact. Standard prices for wholesale natural gas in Europe could fall by 25%, or more, by next year if the offer of Russian gas is available. As a result, this will also lead to low electricity prices. I have always expected Germany and other countries to return to the purchase of Russian gas, even if Vladimir Putin remains in power, and I have not yet found what leads me to change my expectations. The lifting of sanctions supports the production of Russian goods in respect of the rest of the initial property, because the biggest change arising from Ukraine War was not in production, but in the destination of flow. Instead of carrying out supplies to natural buyers based on the proximity of the geographical location, most Russian primary exports are to China and India. If the lifting of the fines does not lead to an immediate change in the supply of initial goods, it can be given to the rise in prices in the coming period. Initially, reaching an agreement can change the Moscow position on “OPEC+”. During the current period, all evidence indicates the durability of the alliance between Russia and Saudi Arabia, but Putin himself asked that the inclusion of Washington in Riyadh and Moscow hold the three -party talks on the energy market. President Donald Trump “OPEC+” explicitly asked for production. In addition, the lifting of sanctions and the returns of US investments can increase especially the Russian productive capacity, especially in oil. But it is a matter that does not take weeks but years.
The return of Russian initial goods to the markets? It has never disappeared from that
