Don't expect cheaper energy from a Trump deal with Putin

US sanctions did not curtail Russia's hydrocarbon supplies much

- Javier Blas

The return of Russian commodities to the global market isn't a question of if, but when—and under which conditions. That moment is approaching, yet the lifting of sanctions by the West and the normalization of trade won't be as bearish for prices as it looks at first sight.

As US-Russia negotiations over the Ukraine-Russia war start, there are two competing views in the market. One says the talks will be long and winding, thus, sanctions will remain in place for months, perhaps years. The other says that relief is around the corner.

I believe the latter is more likely. Moreover, what really matters is not the sanctions, but their enforcement. And after last week, does anyone really believe the US Treasury will prioritize policing, say, Russia oil exports? Or that US diplomats are lobbying Asian countries to avoid commodity imports from Russia? Or that the White House isn't looking forward to the return of American oil companies to Russia? The US-led sanctions regime is crumbling—in reality if not in law yet.

The stakes are huge. Russia is a commodities superpower, ranking among the top five in many markets, from crude oil to aluminum to wheat, and is a key supplier to its neighbours. Before Vladimir Putin invaded Ukraine in 2022, disrupting flows, Russia supplied Europe with 25% of its oil, another 50% of its coal, plus nearly 40% of its gas.