Chinese media has recently reported that an oil pipeline between eastern Siberia and the Pacific Ocean has been constructed and is now in operation as of this past weekend, moving an estimated 15 million metric tons of crude oil per year from Russia to China until 2030. Since its operation, the pipe has moved approximately 42,000 metric tons (equal to about 1.1 ton) to energy-hungry China. Russia’s Prime Minister Vladimir Putin called the pipeline a “multidimensional project” that would strengthen the Moscow-Beijing energy cooperation.
According to economics commentators, this is quite the strategic shift on Russia’s part. Liam Halligan, Chief Economist at Prosperity Capital Management, considers that, “Russia can play one side off the other. Russia can command higher prices. Russia can expand its hydrocarbon exports.”
Now, Russia is extracting more oil than Saudi Arabia, making it the largest supplier yet and “fueling” its economic recovery. Thus, Russia’s emergence has implications for the world oil market, especially because oil supplies are currently tight. Will the United States, as the world’s largest oil consumer, find itself too dependent on Russia’s oil supply?