Energy disarmament of Russia: how the oil embargo will deprive the country of money for the war against Ukraine

According to forecasts, the export of Russian oil will decrease by half, and the revenues of the country’s budget will fall by a third.

The energetic disarmament of Russia has begun. From the beginning of this week, Europe, as well as the countries of the “Big Seven” and Australia, refused to buy Russian oil. Europeans have limited the maximum price for other buyers to $60. In response, Putin took offense and declared that Russia itself will not supply oil to Europeans, but will look for buyers in other countries.

This is reported in the story of TSN.

The first consequences of the oil embargo: a queue of dozens of tankers with Russian oil is being searched in the Bosphorus. Turkey requires carriers to provide proof that their cargo is insured. After all, the Europeans prohibited insurance companies from insuring tankers with Russian oil, if its price exceeds the price ceiling of 60 dollars set by them. per barrel It should discourage those buyers who did not plan to support the sanctions to buy Russian Urals and refuse it.

“The European Union, which has the world’s most powerful insurance companies and shipping transportations, has essentially created control over 100% of the world. They are sitting in the Bosphorus and are afraid that tomorrow the agreements on insurance will cease to operate,” said the chairman of the board of the Oil and Gas Association of Ukraine” Andriy Zakrevskyi.

Russian oil will continue to flow to Europe through pipelines. The EU made an exception for Slovakia, Hungary and the Czech Republic. Their oil refineries are technologically configured for the Russian Urals, and Brussels agreed that the conversion will take time.

Prolonged discussions about what the maximum price for Russian oil should be also ended with a compromise solution – a ceiling of $60. in a pile with other restrictions will deprive Russia of a significant share of its oil revenuesbut at the same time will not allow the global market to become unbalanced.

“My main message is this: we have to be patient because there are no sanctions that could shut down Russia at one point. It is impossible. Therefore, we do not have to strive for it. We should be very methodical and patient in our decisions,” said Prime Minister of Lithuania Ingrid Šimonite.

“European officials had to find some kind of balance so that both the effect was there and the balance was preserved. So that it would not turn out that there would be an opportunity for the black market to grow. Even for us, although we need, of course, to hit Russia as much as possible, even for us here there is some caution, because Eastern European refineries – many of them work on Russian oil, and this is where gasoline and diesel come to us from. We do not want a repeat of the fuel crisis of the spring,” said economist Pavlo Kukhta.

The price ceiling will be reviewed every two months, adjusting it according to changes in the market. Despite the seriousness of the decision of the Europeans, the oil embargo will be painful for Russia. After all, revenues from the Urals are the main item of Russian profits, from which the Kremlin pays for the war in Ukraine. It is predicted that the export of Russian oil will decrease by half, and the revenues of the Russian budget will fall by a third.

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