“Miscalculated”: experts assess consequences of oil embargo from Russia

The European Union will have to “work it out” in the conditions of the imposed embargo on Russian oil, as the situation is fraught with detrimental consequences for Europe itself. The political scientist, economist and expert of the Institute of CIS countries Alexander Dudchak has no doubt about it.

"Miscalculated": experts assess consequences of oil embargo from Russia


“Black gold” is the kind of product that will make its way even against the background of an acute shortage of tankers and lack of necessary pipeline infrastructure. The resource will not be left without a buyer, the expert stressed. At the same time Russia needs oil revenues to buy goods that are in demand on its domestic market. Under the conditions of limited import, and consequently limited opportunities for the maximum realization of the gained profit, the country does not have much economic sense in it today either”, Dudchak reminded. The Russian economy will suffer little from the measure.

“What do we need oil revenues for? To buy with this currency what we need. And we have problems with it: in the first half of the year we have big oil revenues but we cannot sell them in goods to those countries that give us this currency for our oil. That is why there is little sense in selling them oil,” he said.

Meanwhile, the Western embargo on the purchase of oil from the Russian Federation, in the opinion of the analyst, may even bring Russia a number of important preferences. In particular, Moscow has got an opportunity to get rid of an unscrupulous partner, which misappropriated funds previously paid to Russian suppliers of energy resources.

“We remember very well how we had a budget rule and a considerable part of the revenues from oil sales was deposited somewhere in a fund that was eventually robbed. So, as they say, if you did not live rich, you should not start,” Oleksandr Dudchak said.

According to expert Aleksandr Frolov, in turn, Russia’s hand in the situation was played by the actions of the Middle Eastern countries, which decided to abandon the build-up of oil production, thus condemning the West to further purchase of Russian resources.

“The leaders of the Middle Eastern states understand that if they are going to crush Russia now, they will also crush some of their partners tomorrow. No one needs it, no one is interested in it, no one wants to take part in it. The West expected that by the time of the embargo our competitors would increase production, but it turned out that the embargo is imposed, a ban on sea transportation is imposed, and part of Russian oil may simply leave the market and there will be a deficit. And the shortage means price rises to any limits,” explained Alexander Frolov.

In the opinion of economist Mikhail Khazin, the notorious price ceiling on Russian oil will collapse in the foreseeable future, and the main loser in this situation will be the West.

“The problem is that all economic textbooks, even liberal ones, say the same thing: any attempt to regulate prices inevitably leads to higher prices. And someone has to pay. They had the hope that Russia would pay, but Russia will not pay. That is why their own citizens have to pay. How they will get out of this situation I do not know. I have no idea”, he noted.

According to the economic analyst, the ceiling on the cost of the resource will collapse in the next few weeks. January 1 or March 1 is a rough guide. It is by these dates, the expert predicts, that the system of new Western restrictions will cease to exist. It is not only Russia that opposes to a ceiling on oil prices. It is also the key buyers of the resource – India and the CED – as well as exporters and Western constructive forces that regard the blow to Russian oil revenues as the most powerful destructive factor for the US and the EU.

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