US allows Russian oil sales to tackle rising prices

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Oil prices bubble over $90 a barrel.

It's world business express from the BBC World Service,

I'm Leana Bern.

Is Russia benefiting from the US's Rail War with Iran

and how Nepal's latest connections were all about its economy?

Friend Crude, the international benchmark for oil prices,

keeps climbing.

Earlier, it's sword past $90 a barrel for the first time in nearly two years.

Guitar's energy minister told the financial times

Gulf exporters could be forced to shut down shipments within weeks

with reports that Kuwait has already started cutting production.

Tankers carrying oil and liquefied natural gas cannot pass through the

straight of her moves as the war between the US,

Israel and Iran escalates.

Randip Sommel, fun manager at M&G investments, is with me now.

Randip, how significant is that $90 mark?

It's huge. Oil is now up 42% European Brent this year alone.

And the time when we thought that the global economy was normalising again

and inflation was coming down, we've been hit by yet another shock.

And it's not just oil unfortunately, gas as well.

European gas is up 80% this year adding to the inflationary concerns.

Yeah, I mean, it's already hitting US consumers.

I see it's up 11% in the week gas prices.

Yes, and the US economy now is starting to show some jitters as well.

Non-farm payroll numbers down 92,000.

That's the highest number since COVID.

Well, another development is that the US is eased

curbs on India's ability to buy Russian crude.

Mukesh Kumar Sadev is a former executive at India Oil Corporation Limited,

a state-owned energy company and the country's largest oil producer.

He's now the CEO of X Analysis, a global oil market's monitoring business.

He says India's reserves could run out soon.

India is nowhere near China.

India has not invested heavily into the storage park.

India's doesn't produce much oil.

China still produces about 4 million dollars per day of its own oil and buys a lot.

So I think we can put some number around 10 days, 15 days, 20 days.

Typically, you talk about 30 days of storages.

But the only thing I would say is that before this was started,

there was indeed some higher purchases that were taking place.

A lot more evacuation was happening from the Middle East towards the country.

So there might be some buffer because prior to the conflict,

there were a lot of evacuations and a lot of oil was already flowing towards India.

So that might help.

But certainly, I think the kind of shock we are in the world,

no country probably have an answer other than China.

That was Mukesh Kumar Sadev, the CEO of X Analysis.

So does Russia gain the most from this situation?

I put that to Sergei Vakulenko,

a senior fan-loat at the Carnegie Russia Eurasia Center in Berlin

and formally with Gazprom.

It's definitely bringing short-term benefits to Russia.

Oil prices are up in general.

There are now takers for Russian oil.

Question is for how long though?

If it's going to last only a few weeks or so,

it's not going to make that much of a difference.

Now we're hearing that roughly 145 million barrels

a Russian crude could potentially be redirected to India.

How significant is that volume in the context of global oil markets?

There was a build-up indeed of Russian oil sitting on the water

and looking for buyers as Indian buyers, at least some of them,

were canceling their orders in the fear that they might incur a wrath

of U.S. sanctions.

Well, now these fears are out.

140 million barrels a day is one and a half of global days' demand.

And that's about a week of Gulf oil supply

that's currently being locked in the Gulf because of the closure of Hormuz.

But doesn't this highlight the reality that when energy markets tighten

sanctions, they just become much harder to enforce?

It is indeed the case, the discounts on Russian oil

has been growing steadily over the last few months

were growing mostly because there was over-supply in the market

and the buyers had alternatives rather than a fear of American sanctions.

When the market was in balance or in slight under-supply,

just quite a few buyers were quite willing to accept Russian oil despite the risks.

That was for Vakalenko, Senior Fellow at the Carnegie

Russia Eurasia Center in Berlin.

Rundeeb Sommel is still with me.

Rundeeb, you were mentioning earlier, this turns everything else on its head,

doesn't it? So what are central banks thinking about all of this?

Well, I mean central banks have been trying to get interest rates

down as inflation has come down to keep the economy moving.

Now, if we start to see inflation start to rise again,

their ability to cut interest rates will be dampened

and we're potentially even looking if this continues for a protracted period of time

that rates may need to rise to get inflation under control.

I actually saw a report about that that the ECB might have to actually put up interest rates

by 25 basis points.

That's right. I mean, thankfully this has happened in spring

and our requirement for natural gas actually goes down.

Had this been winter, it could have been a very different matter.

Oh, well, I didn't know that.

Thank you very much for your telling us that one.

And it's also playing out in the bond markets too, isn't it?

It is. Obviously, it's much tougher with bonds if we start to see interest rates begin to rise.

Yeah.

Randip Somal, fun manager at M&G Investments.

Thank you so much for joining us.

Indonesia says it will ban social media access for children under 16,

citing concerns about online pornography, cyberbullying, fraud and internet addiction.

The communications minister says children's accounts on platforms like YouTube, TikTok and

Roblox will begin to be deactivated from the 28th of March.

It follows a similar step by Australia, which last year became the first country to block

under 16s from social media.

Now, the party of the rapper-turned politician, Belandra Shah,

is reportedly leading an early vote counting from Nepal's general election.

These are the first elections since last year's Gen Z led protests,

which forced the resignation of the government of KP Sharma Ali.

The official results have not yet been announced.

Pukarmala runs a social enterprise that trains and supports leadership and entrepreneurship

in the country.

I think economy was the most important thing in the minds of people.

And when I say economy, I'm thinking really about economic freedom.

A lot of young people are leaving every day abroad,

like three to four thousand young people leaving Nepal every day.

So a very high unemployment rate in the country,

quite naturally, remittance then is a big part of our GDP.

In fact, it's like 28% of our GDP.

The trade deficit on the other hand is also about a quarter of our GDP.

So it's effectively, we're exporting labor and importing goods.

It's a tough economic picture for sure.

And you've got that brain drain that you mentioned.

So what would it take to bring workers back?

The Nepal has a lot of resources, whether these are human or natural resources,

but we've not been able to make good use of the resources.

So what we need in the country is that enabling environment,

the policy environment, the trust for these youth so that they can grow these enterprises.

And it's not just in the world of entrepreneurship, but also in other sectors as well.

If you look at some of the most promising sectors in addition to the agro-processing industry,

there's also a lot of hope in high-value tourism or IT and hydroelectricity, of course.

So there are these niche areas where the country can grow national competitiveness.

And I think these sectors can begin to address some of these issues.

That was Pukarmala, who runs a social enterprise in Nepal.

And that is it from World Business Express from the BBC World Service.

Please subscribe to get the latest from us to search for World Business Express,

wherever you get your podcasts. I'm Leana Burn. Thanks for listening.

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You can target your buyers by job title, industry, company, role,

seniority, skills, company revenue, so you can stop wasting budget on the wrong audience.

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