Russia, Saudi Arabia and the US – what next for oil markets?

The impact of a breakdown in Russo-US relations is much more nuanced in liquids than in gas

All oil market eyes remain fixed on the US-Russia standoff over Ukraine, particularly given that current oil balances are on a knife edge and Opec+ spare capacity, expected to reach 2mn bl/d by mid-year, is the key balancing tool. The implications of any escalation for gas markets are clear, but for oil much depends on the shape of any sanctions. On the gas side, benchmark TTF contract prices would surge. And European buyers would have to pay a hefty premium to attract flexible LNG volumes from the US—where portfolio traders have destination flexibility—Qatar—which has a limited amount of spot volumes—and more far-flung destinations as distant as Australia. In crude and products markets, sho