BRICS Countries Create Alternative Supply Chains

The International Monetary Fund is sounding the alarm: the world economy and trade are divided into two blocs; trade, especially in raw materials, is slow, and traditional supply chains are under threat. Moreover, the West’s disproportionate use of sanctions has jeopardized its credibility in the eyes of many countries around the world that are forming associations and beginning to build alternative supply chains.

The group leading the international news ranking is BRICS, which will expand by six more countries on January 1, 2024. At the last BRICS summit in Johannesburg, the founding states – Brazil, Russia, India, China, and South Africa – sent official invitations to join the association to Egypt, Saudi Arabia, Argentina, the United Arab Emirates, Ethiopia, and Iran. The group is preparing to consolidate its presence on most continents and is working to build an integrated system of trade exchanges and financial transactions that can be carried out in the national currencies of the participating states. An important role is played by the New Development Bank (NDB), the BRICS banking institution based in Shanghai (China).

Information from the last few months allows us to understand the scale of integration processes. In September, after a two-year break, Russia resumed oil exports to Brazil. The South American country received 620,000 barrels of Urals oil, the largest volume it has imported in 13 years.

Brazil imports many Russian oil derivatives, primarily gasoline and diesel fuel. But in September, the Russian government temporarily banned the export of these fuels to meet domestic demand from farmers harvesting 137 million tons of grain. At the same time, 43% of the Russian grain harvest will be intended for foreign trade, primarily with the BRICS countries. In September, Brazil imported 246,000 tons of wheat (worth 61 million dollars) from Russia, which is 2.6 times more imports compared to the previous month.

The record for the import of Russian wheat in the period July-September 2023 belongs Egypt, which is preparing to become a full member of BRICS. Over the past three months, Egypt imported 2.03 million tons of wheat from Russia, which is +9.1% compared to the same quarter in 2022 (1.862 million tons).

In total, Russia sold 18.18 million tons of grain abroad in July-September, exceeding their exports by 61% for the same period of the previous agricultural season. The exports back then amounted to 11.2 million tons. Turkey (1.864 million tons) and Iran (1.817 million tons) are, respectively, in second and third places among the largest importers of Russian wheat.

Saudi Arabia also performed well, increasing grain imports from Russia by 61.2% to 1.664 million tons in July-September, while Libya imported 1.108 million tons, down 10.3% compared to the same period in 2022.