Western Countries Still Trade With Russia

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Western Countries Still Trade With Russia

Since the Ukraine war burst, western counties implement sanctions to Russia successively. But has western countries cut off the trading with Russia completely? Things look like not that simple.

Although western countries sanction Russia in economy, finance, politics and many other aspects, the energy problem is still a headache for Europe. After the sanction, the oil and natural gas prices rise sharply. On March 7th, the natural gas price rises to 3900 USD/kilostere, which is over 10 times than it in the same period last year. Russia is the main source of oil and natural gas to Europe. The data indicates that the natural gas and oil from Russia are over 30%. That means the energy price will rises much once cut off the trade with Russia.

What bad influence there will be if Europe sanction Russia in energy

As the leader of sanction, America ask Europe to sanction Russian energy. But European countries, especially Germany and France don’t willing to do this. In the beginning of the sanction, Germany declare to stop the Nord Stream-2 project. That cause the domestic natural gas price rises over 80%. The result is unaccetable to Germany.

If cut off the energy trade with Russia, European countries have to look for alternative energy sources. But the question is alternative sources can’t meet the needs of such large quantity. America can fill the gap but the price is much higher than Russia. Europe is not fool. In fact, Germany has refused to stop the Nord Stream-2 project twice. If Europe really cut off the energy trade with Russia, the huge natural gas market will be controlled by America. Image that America forbid Russia to use Euro, these are two huge impacts to Europe. So we estimate that Europe will not cut off the energy supplying.

What will Russia do

As for Russia, it undersells American treasury and turn to buy lots of CNY. The data shows that CNY is just 0.1% that Central Bank of Russia hold, while it’s 13.1% in the middle of 2021. That means Russia will expand the trade with China. It’s an opportunity for foreign trade companies in China like OrientFlex. We can grasp this opportunity and expand our business in Russia. By the way, Russian clients may pay in CNY in the later orders.