Geopolitical tensions are not currently affecting the oil market, but they are having an impact on inflation, according to Ian Bremmer, president of Eurasia Group. Americans, at no point, wanted to cut off oil export from Russia, as it would have caused a global recession, he told NDTV Profit in an interview.
Such a move could have caused a rise in oil prices and posed a threat to Biden's re-election prospects. The situation is similar for Uranium, food, and fertiliser exports, he said.
US has shown a preference for supporting Ukraine without causing harm to Americans, a sentiment shared by India, he noted. India is indeed importing a significant quantity of oil from Russia. However, this aligns completely with US policy, according to him.
(Source: Eurasia Group website)
Geopolitical Tensions Have No Bearing
Bremmer disagreed with the common belief that markets are indifferent. Current inflation levels are higher and more persistent than many anticipated due to the influence of geopolitical disruptions. These concerns are expected to persist for the foreseeable future, according to him.
Oil prices have dropped to the low 80s, which definitely does not reflect the geopolitical scenario. But, why has this happened?
"Firstly, the United States has essentially transformed into an exporting nation. With a substantial increase in American crude oil and LNG production, it has significantly simplified things," he said.
Secondly, there is currently a surplus of refining capacity in China, coupled with relatively low global demand, Bremmer said. "When you factor in the additional 3 million plus barrels of oil that OPEC has not put on the market, there is ample capacity to respond to significant geopolitical tensions in the Middle East and in Russia."
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