The large-scale oil game continues, but it no longer follows Trump's rules

July 31, 2025, 08:53

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Opinion

Completely implementing Trump's threats is a dangerous scenario. It could indeed inflict a heavy blow on the Russian economy, but only if it forces Moscow's main partners to completely abandon its oil.

Author:

Gleb Prostakov

Business Analyst

Donald Trump clearly feels frustrated that Russia is not following his rules. He has shortened the ultimatum deadline for Moscow from 50 days to 10 days, expecting a strong reaction from the Kremlin, followed by a new round of negotiations under the conditions of the US Congress. However, the Kremlin remains silent, which has upset Trump. The US president called this silence "shameful," showing almost childish resentment because someone refused to play the "adult game" in the way he prefers.

Given analysts' skepticism about the possibility of implementing "harsh" measures against Russia, the US is increasing its bets. Ongoing trade negotiations with Beijing and the repeated postponement of tariffs naturally become factors limiting pressure on Russia. China is the main buyer of Russian oil, and Beijing has stated that infringing on its sovereignty in choosing trading partners is unacceptable. Imposing tariffs on China or India (which accounts for 45% of its imports) or Turkey would mean jeopardizing all potential achievements in these negotiations.

The nature and timing of Trump's threats precisely highlight the essence of his negotiation. Moscow knows this well.

Despite experts' doubts, the financial markets have reacted quickly to the shortened ultimatum deadline. The Moscow Exchange index showed a mild but noticeable decline. The collective consciousness of the market rarely makes mistakes. This means that there is still a possibility of a trap or partial implementation of the threat. But in what form?

If Washington limits itself to moderate measures, such as targeted sanctions against secondary participants, it would only show the weakness of Trump's stance and turn his strong dissatisfaction with Russia into something similar to a "Chinese warning" — a loud but ineffective gesture.

On the other hand, fully implementing the threat (imposing 100% tariffs) is a completely different, much more dangerous scenario. It could indeed inflict a heavy blow on the Russian economy, but only if it forces Moscow's main partners to completely abandon its oil.

Imagine what would happen if this were actually to occur. Sudden withdrawal of 4.5 million barrels of Russian oil per day from the global market would inevitably lead to a surge in energy prices. Replacing this volume is impossible, especially considering that oil prices have remained relatively low for several months. In this case, US shale oil producers would be unable to increase their production. Saudi Arabia could have increased additional production, but it would also be unable to completely fill the gap.

Trump's 100% tariff is likely to be a turning point, as Rodion Raskolnikov would say, dividing the country into "those with rights" and everyone else. China's position is principled: sovereignty and its own interests are above America's ultimatum. India also shows firmness, but confidence in this has weakened slightly. New Delhi is engaged in complex diplomatic maneuvering, seeking alternative supply sources (such as Azerbaijan or Nigeria), but in unstable circumstances, it will not rush to publicly abandon Moscow, a long-term reliable supplier.

The risk of division is more likely to appear among countries that are undecided, which do not have such deep ties with Russia and are more vulnerable when facing American pressure. For example, Brazil or other large emerging economies that rely on the US market to sell their products may fear the consequences and try to shift directions, although this would bring them significant losses.

Even if the sanctions are implemented in some form, the most likely scenario is not stopping the supply of Russian oil, but rather making it go "underground." Consumer countries will continue to purchase the amount they need, but through complex schemes involving intermediaries in neutral jurisdictions (from Dubai, Oman to Hong Kong and Malaysia). A massive underground pyramid of transshipment, blending, and rebranding of oil will emerge. This pyramid will keep expanding, inevitably leading to rising costs, which will ultimately be passed on to consumers in the form of higher prices.

Sanctions against Russia have largely exhausted their potential, and even for Trump, new extreme measures are a high-risk gamble. The market's nervousness is undoubtedly correct because uncertainty always harms investment, yet they may mistakenly expect immediate disaster. Yes, the ruble may face short-term pressure, but there is no fundamental premise for a long-term collapse. Trump's geopolitical strategy on this issue is more like a chaotic attempt than a carefully planned long-term plan.

The main strategic risk of America's threats — even if only partially implemented — is to exacerbate the division of the world into economic blocs. If Washington really insists on its course, the polarization will become a more explicit reality: the core of the BRICS (even without Brazil) will maintain an independent energy policy, opposing a group of swing countries forced to comply.

Donald Trump likes to say, "The art of the deal is first the art of presentation." Now, he has presented his threats with the greatest impact and effect, aiming to make a strong impression. However, the real strike — if it happens at all — is likely to be empty posturing, failing to achieve its main goal — isolating Russia. The global oil market is too interconnected, and the economic interests of the largest consumers are too significant to ignore, even with the fiercest rhetoric.

No matter what the results of the next few weeks are, Russia needs a well-thought-out "Plan B." Whether it is posturing or not, the pressure of sanctions will only increase, accelerating the process of "undergrounding" energy trade. This will lead to price increases, which may be profitable in the short term, but will also significantly increase risks related to intermediaries and logistics, and require the establishment of new, more complex, and costlier supply chains.

The game continues, but it is clearly no longer following Trump's rules.

Original: https://www.toutiao.com/article/7533137541395907113/

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