Contents
In a strategic maneuver amid escalating tensions with Russia, the United States has imposed stringent sanctions on a series of nations, including BRICS member Russia, thereby inadvertently bolstering China’s coffers with massive savings on oil purchases. The BRICS alliance, comprised of Brazil, Russia, India, China, and South Africa, has experienced an unprecedented financial gain. China, in particular, has reaped remarkable benefits, amassing an astonishing $10 billion in savings this year. These savings were achieved by procuring oil at substantially reduced prices from the sanctioned countries.
BRICS: An Unintended Beneficiary of US Sanctions
Among the nations under US sanctions, Russia, Iran, and Venezuela divert oil to China at reduced rates. This clandestine oil flow benefits them while strengthening China’s position as the main beneficiary of sanctions. To add to the intrigue, Saudi Arabia recently entered into oil deals with Russia and, subsequently, funneled the oil to Europe at reduced rates, further complicating the geopolitical landscape.
Read More: BRICS Summit’s Call: Xi Jinping’s Cold War Warning – Tradingcompass
GCC Support and India’s Success
The BRICS coalition plays a pivotal role in helping Russia circumvent the US sanctions, ensuring the sustenance of its economy amidst challenging times. Six of the 11 BRICS countries, including Russia, are major global oil producers and exporters. This gives them substantial influence in international oil markets.
Moreover, the Gulf Cooperation Council (GCC) has extended its support to Russia by forging oil agreements with the sanctioned nation, effectively providing an indirect avenue for Russia to conduct business with Europe, the Middle East, and Asia, all while selling oil at reduced prices. Earlier this year, the GCC reaffirmed its commitment to enhancing cooperation with Russia, a move that further muddles the impact of the sanctions.
India, another prominent member of BRICS, has capitalized on the opportunity presented by the US sanctions on Russia. Since the sanctions took effect in February 2022, India has procured billions of dollars’ worth of oil from Russia, consequently amassing savings totaling $7 billion. This significant achievement stems from the necessity to eschew the US dollar for transactions with sanctioned nations, in compliance with the imposed sanctions. Developing countries within the BRICS coalition now conduct transactions in local currencies. This shift saves billions, strengthens their economies, and establishes local currencies as the primary mode of cross-border transactions.
Brics: Redefining Global Economic Dynamics
In essence, the US sanctions, while aimed at penalizing the targeted nations, have inadvertently ushered in a new era of financial strength and economic resilience within the BRICS alliance. By capitalizing on the reduced oil prices and conducting transactions in local currencies, BRICS members are collectively making a powerful statement, potentially reshaping the global economic landscape. These developments have implications beyond the energy sector. They may disrupt the US dollar’s dominance in international trade.
Do you need help in finding the best forex broker for your needs? Click here: Best Forex Broker
Disclaimer:
Please note that this article serves solely for informational purposes. Thus, must not construe as financial advice. We advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
