US Treasury Secretary Scott Bessent said Ukraine is partly to blame for surging energy prices worldwide after this week’s G20 summit in the US.
Bessent met with his Russian counterpart on the sidelines of the summit, to the displeasure of his European colleagues. Bessent reportedly told Moscow that no business opportunities will arise until Russia’s war in Ukraine is over.
Speaking after the summit, Bessent claimed Ukrainian attacks on Russian refineries have helped send global energy prices soaring, according to the New York Times on Thursday.
“We are going through an energy shock right now due to both the war in Ukraine – because Ukraine has decided that they want to blow up Russian energy assets and refine products, so that is creating upward price pressure on a global basis,” Bessent said.
He then acknowledged that the US’s war in Iran – which prompted Tehran to strangle the Strait of Hormuz, a key oil shipment chokehold – is also to blame, before claiming that it will be over soon.
“And then the conflict in Iran. And the conflict in Iran will end,” he added.
As of Sept. 4, Brent crude stands at around $91 per barrel – up from around $70 before the US’s war in Iran started on Feb. 28, after briefly spiking to $118 in April and returning to $72 at the beginning of July.
Russian refineries struck hard – but crude exports continued
Ukraine has struck Russian refineries hard – but Russia still produces oil.
By July, Ukraine’s military claimed it had disabled 43% of Russian refineries, with a sprawling fuel crisis reported across Russia as the country failed to refine enough fuel for domestic consumption, prompting it to ban exports and rely on imports from other refining nations such as India and Kazakhstan.
Ukraine’s Ministry of Defense said Wednesday that it struck 12 Russian refineries throughout August, with some attacked multiple times.
But according to reports by the Centre for Research on Energy and Clean Air (CREA), an energy think tank, Russia’s energy export volumes stayed flat despite a 12% revenue drop month-on-month in July – compared to the 7% rise in overall volume exported and a 1% revenue drop a month earlier.
In short, Russia is still exporting roughly the same amount of energy products despite the strikes.
Russia’s conflicting narrative on whether a fuel crisis is real
The Kremlin has since tried to downplay the crisis, with top officials assuring the population in July the fuel crisis is not to last, but Russian President Vladimir Putin offhandedly acknowledged the crisis is real on Thursday and might last for some time.
“[We] assumed that these were purely civilian facilities and could not be targets of any kind of attacks even amid an armed conflict,” Putin said. “But in this regard, we were mistaken. Our adversary, unfortunately, thinks differently.”
When asked whether Russians should get used to gasoline shortages, Putin said Russians should be “ready for anything.”
Putin also argued that high global oil prices make exporting crude more profitable than refining it at home, a claim that remained questionable.