Europe’s decision to ban most Russian oil imports is based on a simple calculation: because the EU accounts for about half of Russia’s oil exports, an embargo would roughly halve Russia’s oil-export revenues. But the reality is more complicated.
BRUSSELS – As the war in Ukraine passes the 100-day mark, it is worth asking how much damage Western sanctions have done to Russia’s economy, and whether forthcoming measures – especially the European Union’s newly announced embargo on most Russian oil – can change Russian President Vladimir Putin’s strategic calculations.
Oil used to provide the bulk of Russia’s export earnings. In December 2021, exports stood at 7.8 million barrels per day – an annual rate exceeding 2.8 billion barrels. While this is a pre-invasion figure, Russia is expected to maintain robust export capacity until lack of access to cutting-edge Western equipment limits production.
In the short run, Western sanctions will not affect Russia’s oil output. Moreover, domestic use is falling as the Russian economy contracts. Russia can thus sustain its oil exports for the time being, and, at $110-120 per barrel, exports of crude alone could earn Russia over $300 billion per year – enough to finance its government and sustain its war.
BRUSSELS – As the war in Ukraine passes the 100-day mark, it is worth asking how much damage Western sanctions have done to Russia’s economy, and whether forthcoming measures – especially the European Union’s newly announced embargo on most Russian oil – can change Russian President Vladimir Putin’s strategic calculations.
Oil used to provide the bulk of Russia’s export earnings. In December 2021, exports stood at 7.8 million barrels per day – an annual rate exceeding 2.8 billion barrels. While this is a pre-invasion figure, Russia is expected to maintain robust export capacity until lack of access to cutting-edge Western equipment limits production.
In the short run, Western sanctions will not affect Russia’s oil output. Moreover, domestic use is falling as the Russian economy contracts. Russia can thus sustain its oil exports for the time being, and, at $110-120 per barrel, exports of crude alone could earn Russia over $300 billion per year – enough to finance its government and sustain its war.