How to exhaust Putin's military car

But since Russia accounts for approximately 11% of world oil production, attempts to reduce Russian oil imports have led to a sharp rise in prices in the world market, allowing Russia to earn oil exports even more, supplying less volumes. Some countries, especially India, China and Turkey, have increased oil imports from Russia. But this does not necessarily mean that they have helped Russia greatly because they buy this oil at high discounts.

At the beginning of 2022, Russian Urals oil was sold at a low $ 1-2 discount per barrel against the European brand Brent. However, since April, this discount ranges from $ 31-36 per barrel. For example, on August 3, the price of Urals oil was $ 76 per barrel.

Therefore, although India, China, Turkey and a number of other countries refused to participate in Western sanctions against Russia, they successfully introduced a de facto market upper price threshold for Russian oil, and created a global coalition to support this threshold. Instead of criticizing these countries for buying oil in Russia, the West should thank them.

However, the current world market price for oil - $ 100 per barrel - is still too high: since January it has increased by $ 24 per barrel because of the Russian war, Western sanctions and fears that Russia can stop oil exports. The event introduced two types of sanctions against the oil sector of Russia. In July 2014, significant sanctions were imposed on the export of oil technologies to Russia. The objects of these sanctions were deep water drilling, arctic drilling, shale oil.

This year, oil technological sanctions have been expanded, forcing three major Western oil service companies - Halliburton, Schlumberger and Baker Hughes - to leave Russia. These sanctions make sense: they do not lead to a sharp decline in production, but restrict Russia's ability to maintain oil production in the medium term. The second category of Western sanctions should be covered by Russian oil exports, both oil and petroleum products.

Along with sanctions against Russian gas exports, this type of sanctions caused the greatest disputes because it has led to an increase in oil prices, which harms the West and other oil importers, while bringing benefits to oil exporters. The event imposed sanctions that restrict exports from countries with lower volumes of oil production, especially Venezuela and Iran, which did not cause any strong disruptions in the global oil market.

But such sanctions, of course, raised the price of oil, which was not in favor of the West or other oil importers. Attempts to impose such sanctions against Russia look at best reckless and possibly counterproductive. Many poor oil importers will be affected, which tend to be guilty of rising prices to the West, not Russia. Economists usually claim that unwanted imports should be suppressed by duty.

Import duties reduce the price of imported goods (which is desirable in the case of Russian oil), reduce consumption (which in this case would be useful for climate) and is a standard procedure (in all countries there are anti -dumping laws that allow you to quickly introduce significant duties ). But duties also push inflation, which is especially true of oil prices, which threatens to cause discontent. For these reasons, import duties Russian oil are widely perceived as unacceptable today.

That is why US Finance Minister Janet Ellen praises the benefits of the upper threshold of oil and gas from Russia. It is right, but in many ways it is possible to make this event even more effective. In particular, instead of saying non -watery countries "stop importing Russian oil", the event should be asked to keep a discount on the price. The event is not interested in limiting oil production in Russia in the short term, as it will only increase Russian income from oil exports.

Instead, the event should be clearly understood (as it was done in 2014) that it is interested in deterring the growth of world oil prices. This signal will be met in the global south that imports oil. And the West should not worry that Russia will stop oil export, because it simply cannot afford it. Natural gas is a completely different matter. Russia can afford to stop gas export now.

Even in 2011–2013, when prices were high, only 14% of Russian export revenues accounted for the share of natural gas. More than 80% of Russian gas is exported to Europe, which has completely lost confidence in Russia as a reliable supplier and wants to stop this import as soon as possible. The event can and should set the upper price threshold for oil exported from Russia, and it can do so by praising discounts that have been traveling for many non -western countries.