Since the Kremlin began its military strike on Ukraine on February 24, the Russian economy has been subjected to sanctions never before seen.
Price Ceiling Implemented
The current developments, which include a price ceiling on Russian oil sales globally and a western ban on seaborne oil, are considered a setback to the Russian economy, whose energy sector is its foundation.
Contrarily, economists claim Russia’s economy has not yet crashed and is not likely to do so in the near future.
The ceiling is too high; there are other markets besides Europe and Russia’s economy will remain afloat, thanks to its stash of oil and gas export earnings.
Russia’s capacity to finance its conflict with Ukraine might not change. According to analysts, the Kremlin is more likely to shift funds away from the civilian sector and into the military sector than to cut back on war funding.
It may be tempting to conclude that sanctions on Russian oil have been a failure
— Bloomberg (@business) January 5, 2023
The militarization of Russia’s economy is anticipated as the Kremlin works to assemble its invading army in Ukraine.
This indicates that although the standard of living will decline and the public sector will continue to contract, the conflict won’t stop.
The West has barred high-tech shipments to Russia, blocked $300 billion in Russian foreign currency reserves, and shut off a few Russian banks from the SWIFT messaging network after Russia began its assault.
Unparalleled sanctions targeting Russian oil are the most recent strike on the Russian economy. Russian oil imports were prohibited by the U.S., the U.K., and the E.U. on December 5.
Beginning on February 5, the European Union will also begin enforcing a ban on Russian oil products.
Even after sanctions, Russian #economy can pay for #war. …But, paradoxically, #Russia's #economy has not collapsed and is unlikely to do so in the foreseeable future, analysts say. https://t.co/85QPHbsSai
— Carles Dijous (AAlb) (@carlesdijous) January 8, 2023
According to Mikhail Krutikhin, a Russian-aboriginal oil and gas consultant located in Sweden, who spoke to Ukrainian political commenter Olena Kyryk in December, the export ban on oil products will be pretty unpleasant for Russia.
It will prevent it from supplying them to China and India, which have been exporters – not importers – of oil products. G7 and the EU began enforcing a $60 per barrel price ceiling on Russian oil on December 5.
The maximum price mostly affects other nations that continue to purchase Russian oil because the EU, UK, and US have already prohibited the purchase of Russian seaborne crude.
The majority of western-based oil market insurers are prohibited from working with Russian oil that is priced higher than the cap.
Russia Still Supplies Oil
The Czech Republic, Hungary, and Slovakia are three landlocked nations in Europe that still purchase Russian oil delivered via pipelines.
Oleksandr Kharchenko, a Ukrainian expert on oil and gas, informed the Kyiv Independent that China and India wouldn’t be able to make up for the decrease in Russian oil reserves to Europe.
The expenses associated with delivering oil to Asia would be significantly higher.This article appeared in Conservative Cardinal and has been published here with permission.