The rising tension between the US and North Korea has been disrupting energy markets over the last few months. The US called for a ban on oil exports to the country, as a result of Kim Jong Un’s missile testing and threats to reach the US and other countries.
China is North Korea’s largest provider of oil, and the country has expressed doubts over cutting off oil exports. Putting a halt to all exports of oil could anger Kim even more, and many countries including China would not like a war to erupt.
The US had initially proposed for a total stop to oil exports, but have since revised their original sanctions down. The new proposal would have a cap of 2 million barrels imported to the county each year. These sanctions have been passed in the recent UN meeting. North Korea’s retaliation of this has been that the US will ‘suffer the greatest pain’. The US is said to have fired up for military confrontation.
While Russia and China are less inclined to make any dramatic statements, there is a lot of political unrest ongoing at the moment. Brent Crude oil prices have pushed through the $54/bbl barrier, the highest it has reached in months. China and Russia are aiming for a resolution to be met in a non-violent way, and to find a political solution to the nuclear advances in North Korea. However it seem unlikely that a solution will be found. President Putin has described the hostility between North Korea and the US as ‘large-scale conflict’.
Sources: BBC News, Bloomberg, the Telegraph, the Independent