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Why Target Russian Oil Revenue?

It is widely feared that reducing Russian oil revenues could push up the world price of oil (which is priced in dollars) and boost Putin’s dollar revenue, even if Russia’s export volume falls. But is there any alternative?

WASHINGTON, DC – Four months into the invasion of Ukraine, the Russian army continues to grind its way relentlessly through the Donbas region. Some Western commentators are calling for more weapons to be supplied faster to Ukrainian forces. This is without question necessary to stop Putin, but is it sufficient to stop him soon – and in such a way that he doesn’t merely pause to re-equip before starting a new wave of bloody aggression?

According to Avril Haines, the US Director of National Intelligence, there is no prospect for the military conflict to end soon. It makes sense, therefore, to target the economics of Putin’s regime and his ability to wage a prolonged war – or a repeated series of wars against Ukraine and potentially others. And here, Putin has a major strategic vulnerability: Russia’s overdependence on fossil-fuel exports, which generate almost all of its foreign-currency inflows – nearly €100 billion ($104 billion) in the first 100 days of the war.

Consider how the world would react if Russia were to use nuclear weapons against civilian populations anywhere. The horror of that atrocity would immediately result in every country with a conscience refusing to buy oil (or anything else) from Russia. Putin’s revenue would collapse, the ruble would depreciate rapidly, and inflation likely would rampage across Russia. It is very unlikely the Russian regime would be able to continue fighting on that basis. Without exports, a country has no hard currency – and no way to buy supplies of any kind from abroad.

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