The severest economic outcome out of the Ukraine invasion on the world economy will be the crude price rise. Crude reached $120 dollar per barrel in the context of the Russian invasion of Ukraine.

  • The impact on crude will be heavy as Russia is the second largest exporter and the third largest producer of crude.
  • In both production and exports, Russia’s share is around 11%.
  • War led supply side shocks and sanctions may bring down Russian exports and thus push up crude prices.
  • The Crude price (Brent variety) increased from $70 per barrel on first of December 2021 to nearly $ 120 on 4th of March 2022.
  • This is the highest level for crude since 2014.
  • According to Goldman and Sach, crude price may stay at $125 a barrel if the war continues.
  • Production, consumption and export scenarios
  • At present, US is the largest producer of crude followed by Saudi Arabia and Russia is the third largest producer.

The 10 largest oil1 producers and share of total world oil production2 in 2020

Country Million barrels per day Share of world total
United States 18.61 20%
Saudi Arabia 10.81 12%
Russia 10.50  11%
Canada   5.23   6%
China   4.86   5%
Iraq   4.16   4%
United Arab Emirates   3.78   4%
Brazil   3.77   4%
Iran   3.01   3%
Kuwait   2.75   3%
Total top 10 67.49   72%
World total 93.86

Source: US Energy Information Administration

Largest crude consumers

According to the US Energy Information Administration, the largest crude consumers are the USA, China and India. Out of these, USA has sizable domestic production and China also has some attractive domestic production.

The 10 largest oil consumers and share of total world oil consumption in 2019

Country Million barrels per day Share of world total
United States 20.54 20%
China 14.01 14%
India   4.92   5%
Japan   3.74   4%
Russia   3.70   4%
Saudi Arabia   3.18   3%
Brazil   3.14   3%
South Korea   2.60   3%
Canada   2.51   3%
Germany   2.35   2%
Total top 10 60.69 60%
World total 100.23
Source: US Energy Information Administration

The largest exporters

The three largest exporters of crude are: Saudi Arabia (17.2% of exported crude oil), Russia (11 % of exported crude oil), Iraq ( 7.7%), US (7.6%).

The largest importers of crude

The three largest importers are: China: US$176.3 billion (24.9% of imported crude oil), United States: $81.8 billion (11.5%) and India: $64.6 billion (9.1%).

Europe’s dependence on Russia for gas supply

Share of Russia in gas supply to EU and UK

Year Share %
2001 26
2009 25
2014 29
2019 37
2021 32

The European Union and (indirectly) the United Kingdom have a high reliance on Russian natural gas supplies. This dependence has increased over the last decade. The share of Russian gas supplies to the region increased from 32% in 2021 to 25% in 2009 to 32%.

All these trends indicate that Russia is an unavoidable source for both crude and natural gas for the world economy. Reduction of Russian supply will hurt the global economy in the form of higher inflation and the consequent macroeconomic risks.


Share Now